FED leaves rates unchanged with us equities posting solid gains
US stocks finished higher after the Federal Reserve left rates unchanged but doubled the amount that it will begin to taper on its asset purchases. Dow Jones increased by 1.1% to 35, 927, the S&P 500 jumped 1.6% to 4,710 and Nasdaq rallied 2.2% to 15,556. There has also been published a host of economic data, which showed November retail sales rising at much slower pace than expected, import prices came in higher than anticipated and mortgage applications fell, but homebuilder sentiment improved, business inventories rose more than forecasted, and NY manufacturing growth unexpectedly accelerated. In corporate news Eli Lilly and Company raised its full-year guidance, while Vir Biotechnology announced that its COVID-19 antibody therapy developed together with GlaxoSmithKline was effective against the Omicron variant. Treasuries moved lower post Fed with 10-year note advancing to 1.47% and 30-year rate 2 bp higher at 1.85%. US Dollar ticked to the downside with DXY currently at 96.25.
European stock markets have opened higher this morning with DAX up 0.6%, CAC 40 climbing 1.5% and FTSE 100 rising 0.4% after the Fed has announced that it will double the pace of its asset tapering program to $30 billion a month. There is more central bank activity expected from Europe this Thursday with both ECB and Bank of England making the interest rates announcements. Both central banks have to achieve a balance between the need to support economies threatened by the Covid -19 virus and the inflationary pressures. The BOE seems more likely to tighten the monetary policy after data on Wednesday showed British consumer price inflation surged in November to its highest in more than 10 years. The economic data in focus will be the flash December PMI across the Eurozone and UK. EUR USD is trading 0.1% higher at 1.1296 and GBPUSD is higher 0.23% at 1.3292.
Asian stocks rose on Thursday with Japan’s Nikkei climbing 1.1%, while Taiwan’s benchmark gained 0.74%. Mainland China shares were mixed, with energy shares rallying but consumer stocks lower. An index of blue chips ended up higher 0.11%. MSCI’s broadest index of Asia-Pacific shares added 0.43%.
Oil prices are higher this Thursday with Brent Crude gaining 1% to $74.60 and WTI trading 1.1% higher at $71.66. US implied consumer petroleum demand surged to a record high even as the Omicron variant of the coronavirus threatens to dent oil consumption globally. The current Omicron wave may lead to limited restrictive measures across the but lockdowns seem to be unlikely.