With rate hikes, the waiting appears to be the worst part

Chris Beauchamp IG

A wave of relief has swept across equities now that the Fed has hiked rates, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG.

Risk appetite comes storming back post Fed

On the strength of today’s price action, it seems like the Fed rate hike has allayed all the market’s problems to rest. Stocks are up, volatility is down and oil is lower too. It would be silly to judge the effectiveness of one 25bps rate hike by the first 24 hours of trading following the news, but markets seem reassured that Warsh can act independent of the unpredictable resident of the Oval Office, or at least can enact policy without becoming a target for the president’s ire.

Is seasonality still likely to kick in this year?

If this week marks the Vix peak for September and stocks continue to find their footing from here, then the admittedly limited volatility seen over the last three weeks will fall into the ‘just the usual’ category of price action. If Hormuz can remain calm to a degree and Saudi Arabia can restore some flow through the East-West pipeline, perhaps we can look forward to a continued recovery that refocuses attention back onto strong earnings and provides the basis for the Q4 rally.

Author

Chris Beauchamp

Chris Beauchamp has been with IG for four years, and in that time has become a regular commentator and analyst for the financial press and TV, with appearances on all the major financial channels as well as the BBC and Sky News.

AUD/USD gains traction near 0.7100 as the post-Fed USD rally pauses

AUD/USD finds fresh buyers and retakes 0.7100 in the Asian session on Thursday as the US Dollar pauses its hawkish Fed-inspired rally to its highest level since late July. However, RBA rate-hike bets and hopes for US-Iran diplomatic efforts lift risk sentiment and support the risk-sensitive Australian Dollar and the major.

USD/JPY reverses a dip below 156.00 as focus shifts to BoJ

USD/JPY is reversing a brief dip below 156.00 in the Asian session on Thursday, looking to snap a three-day winning streak to a nearly two-week top set the previous day. The US Dollar pauses following the post-Fed rally to seven-week highs, while a more hawkish repricing of the BoJ's policy normalization path supports the Japanese Yen. This keeps the pair's upside limited, with the focus now shifting to the BoJ policy decision due on Friday.

Gold: Upside appears capped by $4,400

Gold climbs sharply and clinches fresh weekly peaks on Thursday, although the bull run seems to have met some initial hurdle around the $4,400 zone per troy ounce. The yellow metal’s rebound reverses three daily declines in a row and follows the modest retracement in the US Dollar as well as another negative performance of crude oil prices.

BoE recap: A cautious stance amid rising inflation risks

The Bank of England left Bank Rate unchanged at 3.75% but delivered a distinctly hawkish message as its inflation outlook deteriorated sharply.

One hike down, more to come? The Fed’s new rate path says yes

The Federal Reserve (Fed) raised its Fed Fund Target Range (FFTR) range by 25 basis points to 3.75%-4.00% in a unanimous decision, saying the move would support a timelier return to its 2% inflation goal.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.