Markets closely watch Fed statement

The U.S. stock market surged on Wednesday during the volatile trading after the Fed policymakers left the rate unchanged but gave hints the December rate hike is still possible. According to CME Group FedWatch, the probability of the December rate hike has increased to 43%, up from 34% before the Fed statement release. The dollar lost 0.1% with ICE US dollar index, a measure of the dollar’s strength against a basket of six major currencies, declining 0.1% to 96.77 (have a look at dollar index today). Trade volume on the US exchanges was 8.5bn stocks compared to the 20-day average of 7.1bn. Dow Jones industrial Average added 1.12%, Nasdaq increased 1.3%. S&P 500 edged up 1.18% to its almost 2-month high with 9 out of 10 its sectors being in the black, financials and energy being the leaders of growth (+2.2% each) and utilities declining 1.1%. The index performance was governed by the sectors reaction on the possible rate hike. Financials were on the increase awaiting for the Fed meeting as they benefit from higher rates with Genworth Financial Services adding 10.3%. On the other hand, utilities favour lower rates, so the possible rate hike weighed on the sector. Apple stocks continued to extend the gains of the previous day after its strong earnings report. Apple iPhone sales almost doubled in China which partly reassured investors in about the China’s economic health. Twitter stocks were 1.5% down, Acami Technologies plunged 16.7% after the weak earnings statements.
Today at 13:30 CET the October Initial and Continuing Jobless claims will be released in the U.S. At the same time, the annualized GDP will come out as well as the 3Q personal consumption, GDP price index and core personal consumption expenditure. At 15:00 CET the September year-over-year pending home sales will be released.
The euro strengthened slightly with EUR/USD pair reaching $1.1065. The pair exchange rate was still close to its 10-week low reached the previous week on unveiling ECB plans to expand the bond buying programme. Late yesterday after the Fed statement release it fell to $1.0915. Volkswagen stocks edged 2.6% up as its quarterly performance was not severely aggravated by the emissions scandal. FTSEurofirst index added 0.6% after the loss of the previous trading day. Today at 9:55 CET the October unemployment change was released in Germany, it turned out to be negative while the seasonally adjusted unemployment rate in October remained unchanged at 6.4%. Today at 14:00 CET the September German CPI (MoM) and the preliminary October German CPI (YoY) will be released in the Eurozone. At the same time in Germany the preliminary October CPI (YoY), EU harmonized, will come out.
Asian markets looked down on Wednesday but then rebounded on the US Fed statement release. Hang Seng index of Hong Kong lost 0.6% while South Korea’s Kospi fell 0.4%. Chinese market reacted on the weak bank earnings released recently and were still responsive to the rate cut. On the other hand, the Japan’s Nikkei climbed 0.6% on bargain hunting paring the losses of the previous day. The USD/JPY pair was fluctuating in a narrow range before the Fed statement, the pair traded at $120.45 yen.
The WTI crude oil prices rose to $43.24 paring the previous losses while Brent prices being steady at $46.81 a barrel. The US Department of Energy Information Administration (EIA) reported the oil stockpiles were less then feared which supported oil prices.
Spot gold declined 1.1% at $1154 yesterday during its weakest trading day in a month on the news the December rate hike in the US was still possible. The December US gold futures price rose 0.9% to $1176 an ounce. Silver declined by 0.3% to $15.80 an ounce on Wednesday.