Sharechat Logo

While you were sleeping: Fed signals patience

Thursday 28th April 2016

Text too small?

US Treasuries and Wall Street moved higher after US Federal Reserve policy makers kept their target interest rate on hold and said they will raise rates only at a “gradual” pace if needed.

“There is no smoking gun in the April statement to suggest that the Fed will hike rates in June,” Gennadiy Goldberg, a New York-based interest-rate strategist for TD Securities (USA), one of the 23 primary dealers that trade with the Fed, told Bloomberg.

US Treasuries rose, pushing yields on benchmark 10-year notes six basis points lower to 1.86 percent.

“Labour market conditions have improved further even as growth in economic activity appears to have slowed,” according to a statement released after the Federal Open Market Committee's two-day meeting ended. “Growth in household spending has moderated, although households' real income has risen at a solid rate and consumer sentiment remains high.” 

“The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labour market indicators will continue to strengthen,” the FOMC said in the statement.

“The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” it noted. 

The Fed said it will “closely monitor inflation indicators and global economic and financial developments.”

Wall Street also gained. In 3.20pm New York trading, the Dow Jones Industrial Average gained 0.5 percent. The Nasdaq Composite Index, which shed as much as 1 percent earlier, was down 0.4 percent, as a slide in Apple shares weighed on the index. In 3.06pm trading, the Standard & Poor’s 500 Index rose 0.2 percent.

The Dow advanced, led by gains in shares of Boeing and those of Verizon Communications, up 3 percent and 2.6 percent respectively. Shares of Apple posted the largest percentage decline in the Dow, trading 6.2 percent lower as of 3.24pm in New York.

Apple shares dropped after the company posted its first slide in iPhone sales, as well as its first drop in revenue in more than a decade. Its results weighed on other tech shares. 

Shares of Twitter sank, trading 16 percent lower as of 3.32pm in New York, after the company reported disappointing quarterly sales and offered an outlook for its next quarter that failed the meet expectations.

“It’s obvious Twitter is having trouble,” Arvind Bhatia, analyst with CRT Capital, told Reuters. “It’s not growing anywhere close to where people expected a while back.”

In Europe, the Stoxx 600 Index ended the day with a 0.3 percent increase from the previous close, amid better-than-expected earnings including from Norway’s Statoil. Germany’s DAX index gained 0.4 percent, while the UK’s FTSE 100 index rose 0.6 percent, as did France’s CAC 40 index.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

ASB workers to strike as bank proposes an effective pay cut
Rising tides, sinking stocks: study explores cost of climate change
May 2nd Morning Report
AGL - Change in Senior Management
Devon Funds Morning Note - 01 May 2024
Rick Christie to step-aside as a non-executive director
CHI - New customer contract to upgrade Marsden Point
Synlait announces changes to Board of Directors
May 1st Morning Report
Devon Funds Morning Note - 30 April 2024