Despite a hawkish meeting, equities rallied following the decision as investors continued to buy cheap stocks
Wall Street stocks rallied following the Fed’s decision to raise rates by a quarter percentage point, as expected. The US central bank not only approved its first interest rate increase in more than three years but also said it would hike another six times this year. Furthermore, Powell hinted that the balance sheet reduction could start in May. Despite a hawkish meeting, equities rallied following the decision as investors continued to buy cheap stocks. As such, the Dow Jones Industrial Average rose 1.5% after turning red initially following the release of the Fed’s statement. The S&P 500 added 2.2% and the Nasdaq Composite gained 3.7%.
Asian stock markets joined a rally on Wall Street, with Japan and Hong Kong leading a jump in regional stocks on Thursday. The MSCI index of regional shares rallied 2.5%. Japan’s Nikkei 225 soared 3.5% and touched a two-week high in recent session, while Kospi jumped 1.48% after South Korea’s finance minister said the authorities will extend loosened cap on banks’ currency forward positions to at least Q2 in case of FX liquidity instability.
In currencies, the dollar witnessed some long liquidation after the Fed announced an interest rate. The greenback stayed under pressure despite the announcement of seven hikes in 2022 surprising the market. The USD index extended losses to 98.30 before finishing the day in the 98.50 area. Early on Thursday, the index struggled to regain the upside momentum, struggling around the mentioned lows. Still, the downside potential remains limited as long as the prices stay above the 98.00 figure.
Meanwhile, BTCUSD turned lower on Thursday following a rally witnessed yesterday. The digital currency peaked at $41,700 to finish above the $41,000 figure. On Thursday, however, the coin came back under the selling pressure and was last seen hovering just above the $40,000 figure. Should the prices give up this psychological level anytime soon, the technical picture will deteriorate. At this stage, however, the bearish potential looks limited.
