The pressure intensified after the SNB surprised with a 50 bps rate hike, bringing policy rate to -0.25%
US stocks finished higher on Wednesday, rallying in the aftermath of the Federal Reserve meeting. The US central bank raised its short-term benchmark rate by 0.75%, as expected. At a press conference that followed the decision, Fed Chairman Jerome Powell said he expected either a 0.50% or 0.75% increase at the Fed’s July meeting. Technology stocks were among the biggest gainers overnight, with Microsoft, Amazon and Netflix each gaining about 3%. The Dow Jones added 1%, the S&P 500 advanced 1.46%, and the tech-heavy Nasdaq Composite rallied 2.5%.
Asian stocks were mostly higher on Thursday, albeit Chinese markets bucked the trend to suffer losses on the news that Shanghai ordered mass COVID testing each weekend until the end of July. On the data front, new home prices in China were down 0.1% y/y in May versus +0.7% in the previous month. On the positive side, Japan’s Nikkei 225 gained 0.40% while South Korean Kospi finished 0.16% higher. Meanwhile, Hong Kong’s Hang Seng gave up more than 2% as the Hong Kong Monetary Authority raised its base rate by 75 basis points to 2% on Thursday.
In Europe, equities opened lower to start the day as the Fed’s aggressive decision fueled concerns about a potential recession. The pressure intensified after the SNB surprised with a 50 bps rate hike, bringing policy rate to -0.25%. As even the most dovish of central banks are moving now, investors are getting more worried about the economic outlook.
Meanwhile, the US dollar is back on the offensive after yesterday’s retreat in the aftermath of the Fed decision as traders opted to take some profit at fresh twenty-year highs. As such, the USD index briefly rallied to 105.80 before finishing below the 105.00 figure. On Thursday, the dollar is back above this handle, with major counterparts coming under renewed selling pressure except for the Swiss franc. USDCHF plunged to one-week lows after the SNB raised rates by 0.5%.
