On Wednesday, the U.S. Federal Reserve confirmed an interest rate hike of 25 basis points, sending U.S. stock prices broadly higher and confirming traders’ expectations, without giving any tangible hints towards future monetary policy. Nevertheless, according to a Reuters poll released on Wednesday, analysts expect at least two more rate hikes in 2017 and as many as three additional interest rate hikes in 2018.

The Dow ended on Wednesday with gains of 0.54 percent while the S&P 500 rose 0.84 percent. The Nasdaq enjoyed a 0.74 percent lift. Asian stock markets followed suit on Thursday with MSCI’s broadest index of Asia-Pacific shares outside Japan rising 1.2 percent to its highest level since mid-2015. South Korea’s Kospi index gained 0.6 percent on Thursday while Hong Kong’s Hang Seng spiked upwards 1.38 percent. Japan’s Nikkei 225 index traded flat on Thursday, resulting from the yen’s strengthening against the dollar.

Dollar Struggles

The dollar struggled after the Fed’s announcement, with yields on two-year notes plummeting 8 basis points overnight. The euro gained 1.2 percent to trade at $1.0727 while the yen rose to 113.38. The dollar index against a basket of currencies fell to the three-week low of 100.510 .DXY, notably below the 101 handle.

Currencies reacted to the dollar’s weakening, with oil priced rising for the first time in a week. U.S. WTI crude futures gained 27 cents on Thursday to trade at $49.13 per barrel. Brent crude gained 31 cents per barrel to trade at $52.12. Spot gold saw its biggest daily gain since September 2016, and traded on Thursday morning at $1,225.13 per ounce.   

 

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