Markets Rally In Wake Of Fed, Central Bankers Turn Dovish, Trade Hopes Rise In Asia

The global markets surge after the FOMC hints at rate cuts, is this the start of the next rally or the beginning of the end for 2019’s market recovery.
Thomas Hughes

The U.S. Futures Are Moderately Higher After The FOMC Meeting

The U.S. futures are pointing to a moderately higher open in early Thursday trading. The Dow Jones Industrials lag the market with a move of 0.85% while the S&P 500 and NASDAQ lead. The S&P 500 is up about 0.95%, the NASDAQ Composite about 1.30%, on what the market perceived as a more-dovish than expected policy statement from the FOMC. The FOMC hinted at possible rate cuts later this year and the first could be as early as July. The CMEs Fed Watch Tool is now indicating a 100% chance of rate cut at the next meeting.

The statement and Jerome Powell’s remarks during the press conference sent the yield on the ten-year Treasury below 2.0%. This is the lowest level for the mid-duration U.S. bond in three years. The dollar also saw some big moves in the wake of the FOMC meeting that trimmed more than 1.0% off the Dollar Index over the last 24 hours. The tech-sector saw the biggest gains following the policy release. Lower interest rates mean lower borrowing costs for businesses and that will fuel stock buybacks later this year. Shares of FAANG stocks are up more than 1.0%.

In economic news employment data remains firm although expansion within the manufacturing sector has slowed. Initial jobless claims came in at 216,000, 4,000 below expectations, and down from the previous week. The Philly Fed’s Manufacturing Business Outlook Survey came in at 0.3%. This is the lowest level since February and reflects a downshift in new orders and shipments. Employment levels remain strong near 15.5 but fell 3 points over the last month.

EU Markets Higher As Central Bankers Turn Dovish

Central bank activity has been hot over the past 24-hours. Not only did the FOMC meet but the BOE and BOJ met as well. Both the BOE and BOJ held rates unchanged, both the BOE and BOJ also cited mounting risks to domestic and global economies. This sentiment is in lockstep with the ECB’s new pledge to stimulate the economy and points to policy easing worldwide. The DAX shot up more than 1.0% intraday to set a 9-month high, it is trading up about 0.80% at midday. The French CAC and UK FTSE 100 are both up about 0.65%.

In Brexit news, the field of candidates to replace Theresa May is cut to two. Frontrunner Boris Johnson is said to retain a substantial lead over the number two candidate. In stock news, tech leads the market with an average gain near 1.8%, Travel & Leisure lags with a loss of -1.3%. Shares of Delivery Hero shot up 10% and to the top of the ranks after it upped full-year guidance.

Asian Markets High On Fed, Trade

Asian markets are broadly higher following the Fed’s dovish policy switch. The move is aided by renewed optimism for a trade deal that has the Shanghai Composite up 2.4% for Thursday’s session. The Hang Seng follows the closest, up 1.25%, while most other indices in the region closed with gains between 0.30% and 0.65%. The word out of Beijing is that talks will happen at the G-20, the talk out of Washington is that talks will start before the G-20. In both cases, officials are upbeat about the situation although traders are cautioned not to expect too much.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US