Asset prices across the risk spectrum surged as the USD fell in response to a finely calibrated statement from the US Federal Reserve. The well-flagged 0.25% lift in interest rates did not deter investors. The Nasdaq index hit an all-time record, and commodities ripped higher. The general buoyancy was enhanced by exit polls in the Netherlands that suggest populism is not as popular with voters as economists feared.
In the official statement and at Chair Yellen’s press conference the Fed stressed continuity with its previous stance, and maintained guidance for two more hikes this year. Expectations that the Fed would lift its economic estimates in light of the new administration were dashed. This confounded those expecting a more hawkish stance, and saw an immediately sell down of the currency.
The gentler than expected interest rate path higher saw almost all asset prices lift, with risk assets like share and commodities rising alongside safe havens such as bonds and gold. The weaker USD added support, as did a surprise draw down of oil inventories.
Futures markets are pointing to gains for the Hang Seng and Australia 200 indices. However Nikkei futures are in the red following the strengthening of the Yen. Energy and materials stocks led US markets and are a likely feature today. IT and consumer stocks lagged the market move, and financials fell in aggregate, suggesting some concerns remain.