Euronews Business looks at how the markets are performing on Thursday after the US Federal Reserve's latest interest rate decision.
ADVERTISEMENTThe price of gold was back above the $2000 level on Thursday morning with oil prices also on the rise as investors reacted to the latest interest rate decision by the US Federal Reserve.
At the time of writing, the yellow metal was up 2.79% at $2,053.00, while US crude was up 1.05% at around $70 a barrel. Brent was also up on the day, by 1.23% to trade at $75 a barrel.
"Gold surged back above $2,000 after the Fed announcement and is once more not too far from the previous record highs. There's still some way to go to reach last week's peak, although that probably wasn't an accurate reflection of gold sentiment at the time. A weaker dollar and lower yields, if sustained, could continue to boost gold at a time when traders are feeling much more optimistic. Perhaps gold could enjoy a Santa rally of its own this year," Craig Erlam, a senior market analyst at OANDA, said.
US and Asia markets react to Fed rate decision
Shares were mostly higher in Asia on Thursday after a powerful rally across Wall Street sent the Dow Jones Industrial Average to a record high as the Federal Reserve indicated that interest rate cuts are likely next year.
In Asian trading, Tokyo’s Nikkei 225 fell as the yen gained sharply against the US dollar, since a weaker dollar can hit the profits of Japanese exporters when they are brought back to Japan.
The Nikkei fell 0.7% to 32,686.25 while the dollar slipped from about 145 yen to 142.14 yen, near its lowest level in four months. The value of the dollar tends to mirror expectations for interest rates, which affect returns on certain kinds of investments as well as borrowing. Elsewhere, Hong Kong's Hang Seng index climbed 1.1% to 16,408.26.
The Shanghai Composite slipped 0.3% to 2,958.99 after a World Bank report forecast that the Chinese economy will post 5.2% annual growth this year but that it will slow sharply to 4.5% in 2024. The report said the recovery of the world's second largest economy from the setbacks of the COVID-19 pandemic was still “fragile.”
Australia's S&P/ASX 200 jumped 1.7% to 7,377.90 and the Kospi in Seoul advanced 1.3% to 2,544.18. India's Sensex was up 1.3% and the SET in Bangkok also gained 1.3%.
On Wednesday, the Dow jumped 512 points, or 1.4%, to 37,090.24. The S&P 500 rose 1.4% to within reach of its own record, closing at 4,707.09. The Nasdaq composite also gained 1.4%, to 14,733.96.
Wall Street loves lower rates because they relax pressure on the economy and goose prices for all kinds of investments. Markets have been rallying since October as investors began hoping that cuts may be on the way.
Rate cuts particularly help investments seen as expensive or that force their investors to wait the longest for big growth. Some of Wednesday’s bigger winners were Bitcoin, which rose nearly 4%, and the Russell 2000 index of small US stocks, which jumped 3.5%.
Apple was the strongest force pushing upward on the S&P 500, rising 1.7% to its own record close. It and other Big Tech stocks have been among the biggest reasons for the S&P 500’s 22.6% rally this year.
The Federal Reserve held its main interest rate steady at a range of 5.25% to 5.50%, as was widely expected. That's up from virtually zero early last year. It's managed to bring inflation down from its peak of 9% while the economy has remained solid.
