The US Fed Keeps Rates On Hold : Markets React With A Bounce

US indices trade firmly up, breaching all time highs as the Fed keeps rates unchanged but indicates rises are coming.

The FOMC meeting has completed, the Fed have made their speech, and the rates are for the moment at least held firm, similarly to our own RBA decision earlier this week. The devil was in the detail of this meeting, as more than the actual decision to hold rates, eyes were on the dot plot, and the likelihood of rate rises this year.

Chairman Powell was seemingly staunch in his opinion that US interest rates are the top level of this cycle, and there appears to be three rate rises intended for 2024, as previously expected back when the last dot plot was scrutinised back in December last year. A consistent consensus in spite of the doubts that were looming is exactly what markets seemed to be hoping for, as the major US indices all jumped on the news, ending the morning sessions strongly up on the day, and in many cases touching or breaching all time highs.

The DJIA currently trades 1.03% up, whilst the S&P 500 is 0.89% in the green, but it is the lesser traded (internationally) Russell 2000 that is performing best on the day. The index which is more a barometer of US economic health than global is trading 1.92% higher at 2074.88. The Russell is still some way behind the ATHs set back in November 2021, but it is getting very close to the 52 week high of 2115.95. The Dow, Nasdaq 100, and the S&P 500 all hit all time highs on the day, and the momentum very much seems to be back in favour of the bulls.

Micron Technology Inc (NASDAQ:MU) is a big gainer on the day, trading almost 15% higher, and Bitcoin (BTCUSD) is also trading just above $67000, up 8% and looking to regain some of the losses suffered in the past couple of days.

The Aussie Dollar strengthened against the US counterpart as confirmation of the intended rate rises came through. AUDUSD trades up 0.81% on the day at 0.65830.

We now wait for the ASX open to see whether local markets were indeed waiting for the Federal Reserve to set the platform for a renewed push, or whether the slightly sideways trading seen over the past days was just part of the natural ebb and flows of volume. The Bank of England (BoE) meeting tomorrow is one of the final Central Bank decisions we will be watching before pulling the focus back in. Commodities should be able to find their feet once the uncertainty around central bank decisions settles, but with Gold have a great week so far it is expected that some of the ASX miners with exposure will wake up to a good morning.