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prensaestatal.com Noviembre 19, 2017


Second Time in the Year Federal Reserve Increases Rates

19 Junio 2017, 12:29 | Dolorita Barahona

Second Time in the Year Federal Reserve Increases Rates

Global shares fall on Fed rate hike, plunge in oil prices

In Asia, Japan's Nikkei 225 ended the day marginally lower.

Stocks fell in Europe and Asia on Thursday as investor concern over the pace of US economic growth overshadowed a widely telegraphed rise in Federal Reserve interest rates that lifted the dollar off recent lows.

After a rally to the $1,265 area, gold came under renewed selling pressure in Europe on Thursday as the dollar gained fresh support against major currencies with EUR/USD sliding to the 1.1150 area.

The exchange rates at MB Bank dropped from VNĐ22,750 to a dollar on Wednesday to VNĐ22,720 this morning.

"As well, yesterday's FOMC (Federal Open Market Committee) meeting was less dovish than expected as the Fed kept its policy forecasts unchanged despite clear deceleration in inflation and a couple of bad data points yesterday".

".because we also expect the neutral level of the federal funds rate to rise somewhat over time, additional gradual rate hikes are likely to be appropriate over the next few years to sustain the economic expansion".

The economy grew at a rate of 1.2 percent in the first quarter of this year, about half as fast as it did in the final three months of 2016.

The FTSE 100 fell by 0.67% to 7,424 in London while the domestic economy-facing FTSE 250 index slumped 2.0% to 19,568.

The rise was widely expected, but Fed policymakers suggested they would raise rates again later this year despite signs of cooling inflation. The S&P ASX 200 in Australia tumbled 1.2 percent to 5,761.00.

The interest rates have been raised by the Federal Reserve on Wednesday. But the rate increase was already priced into most stocks. "It looks like as it stands, policy normalization is still on track, but [the Fed] are watching inflation developments", Jennifer Lee, senior economist at BMO Capital Markets, told MarketWatch.

The U.S. central bank had purchased the assets to help the economy ride out the downturn that followed the 2007 financial crisis.

USA stock futures signalled a rocky start on Wall Street after Wednesday's rate hike and another tumble in tech stocks.

The dollar continued to gain ground in USA trading and bond yields also moved higher while precious metals were unable to gain support from a decline in equity markets.

On Wall Street, stocks closed mixed after the Fed's announcement.

Shortly after the opening bell, the Dow Jones Industrial Average fell 87.86 points, or 0.41 percent, to 21,286.70. Home Depot and Goldman Sachs contributed most of the blue-chip index's gain.

Weakening oil prices that may indicate commercial activity isn't strong enough to reduce a glut in energy products also hurts. Brent crude settled 3.5 percent lower at $47 a barrel and USA crude tumbled 3.7 percent to settle at $44.73. The kiwi fell 0.29% to 0.7248 against the dollar after the data. Brent crude, used to price global oils, edged 1 cent higher to $47.01 a barrel.



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