Markets Mixed After Fed Hikes Rates by 25 bps

  • Market Overview

The US Federal Reserve (Fed) increased its interest rate by 25 basis points last night to a range of between 5.25% to 5.50%, in line with market expectations and its highest level since January 2001. “Fed Chair Jerome Powell insisted that the central bank would take a “data-dependent” approach going forward when determining additional hikes, and clarified that no decision to raise borrowing costs further has been made. The dollar also eased as traders braced for the European Central Bank’s policy decision on Thursday, where it is expected to lift rates further amid persistent inflation ,” added Trading Economics. The Dow Jones closed 84 points higher on Wednesday, while the S&P 500 finished flat and the Nasdaq lost 0.20% after the latest rate hike by the Fed.

European equity markets declined on Wednesday, with the German DAX and the benchmark Stoxx 600 down by 0.50%. Data showing that both UniCredit (ETR: CRIG ) and Deutsche Bank (ETR: DBKGn ) beat earnings projections, was not enough to support markets on the continent.

Asian markets fell on Wednesday as they struggled for direction ahead of the Fed’s decision. Earlier in the day the International Monetary Fund (IMF) also stated that China's economic recovery is stalling due to a decline in its real estate market, sluggish exports, and record-high youth unemployment. The comments were made by US Secretary of State, Antony Blinken, on China's "problematic behaviour" while visiting the Pacific Island nation of Tonga.

The local bourse closed flat before the Federal Reserve decision, while the rand continued to firm, trading at R17.61/$ at 21h30.

In commodities, Brent crude traded 0.41% lower at $83.30 a barrel, while gold was higher at $1 974.17/oz at 21h45 local time.

PSG Wealth Daily Investment Update, 27 July 2023

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