Stocks rejoiced yesterday following the Fed’s move to lower the target interest rate on the Dollar by half a percent. The three major US indices opened high on Thursday after markets had had more time to digest the decision. The Dow Jones and S&P 500 both struck record highs, closing 1.3% and 1.7% higher respectively. The Nasdaq Composite meanwhile gained 2.5% on the day but remains somewhat adrift of its July peak.
The prospect of a more liquid Dollar spurred on commodities, pushing gold up 1% to $2,586 and nudging silver over $31 an ounce. Oil markets are also enjoying some respite, with West Texas Intermediate in particular climbing back to $72 a barrel and Brent Crude up to $74.
Moving on to currencies and the picture is as one might expect. The Dollar experienced a healthy dose of volatility over the past two sessions but now seems to be coming to terms with the news. The DXY lost 0.3% on Thursday and is now languishing around its yearly lows. On the other side of the pond, the Bank of England elected to maintain the 5% interest rate on the Pound during yesterday’s meeting, which helped push Cable up to $1.33. This morning, the Bank of Japan followed suit, keeping rates on the Yen at 0.25% as expected. Japanese officials made an effort to reassure markets after the drama caused by the last rate hike, stating that further adjustments would not occur until markets stabilise.
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