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.  

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.