The Fed hike has not been surprising – stocks fall
The Fed has increased its benchmark rate by 25 bps and hinted that it may delay additional rises while it evaluates the impact of recent bank failures. Fed also awaits the conclusion of the political deadlock over the US debt ceiling and watches inflation.
While most market participants anticipated a quarter-point hike at the May meeting, investors were less confident that the central bank would go for a pause in hiking. The Fed is moving toward a data-driven policymaking process.
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The Dow Jones lost, 0.68%. The S&P 500 also fell, losing 20.01 points, or 0.49%. The Nasdaq fell to the red, losing 0.16%, to finish at 12,060.88.
This week’s highlights include the release of first-quarter earnings reports and the April employment data for the US on Friday. Treasury yields decreased to some extent. The 2-year yield fell to 3.873%.
US 2-year yield chart, source: CNBC
Microsoft and Apple both lost ground by day’s conclusion. On the other side, Google gained 0.13%.
The greenback slips lower despite a Fed hike
The dollar’s value can be affected by the Fed’s decision to raise interest rates. Even though rates went up by 25 basis points, the decision to probably halt has been seen as dovish.
The US dollar index touched a low of 101.05 during the day, while the EUR/USD exchange rate peaked at $1.10925. The value of the dollar decreased to 134.82 Japanese yen.
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New yearly highs were set for GBP/USD, pushing the pair closer to 1.2600 as the Pound Sterling strengthened against the US Dollar.
Oil slumps while gold shines bright after Fed
Wednesday’s 4% drop in oil prices compounded the sharp decline seen the day before. The price of a barrel of Brent futures dropped $2.99, or 4%, to $72.33. This is the lowest closing for the global benchmark since December 2021.
WTI crude oil prices in the US dropped by $3.06, or 4.3%, to $68.60 a barrel. Last seen on March 24th, the session low for WTI was $67.95 a barrel. The previous day was the largest daily percentage drop for both indices since early January when they each dropped by 5%.
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Gold futures keep gaining as investors turn to the safe haven asset. The yellow metal soared 1.26% to $2,048.70. Silver futures followed the gold’s lead. The white metal gained more than 1% attacking the $26 range at $25.88
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