The Fed hints at a rate hike in December, global stocks rally, oil rises and gold climbs. Here are four things to know in the market on Thursday, September 22.
1. The Fed Hints at a Rate Hike in December
The U.S. Federal Reserve made the decision to hold rates at the conclusion of its monetary policy meeting on Wednesday. But the central bank’s statement hints at a possible rate hike in December if the labor market continues to improve.
The Fed also reduced the number of rate increases to one, down from two. It will also take a less-aggressive pace when raising rates in 2017 and 2018.
The central bank will hold two more policy meetings before the end of the year: one in November and one in mid-December. Economists have largely shrugged off the potential of a rate increase in November, as the meeting is scheduled just days ahead of the election.
Markets are pricing in on a 60% chance of a rate increase in December.
2. Global Stocks Higher
U.K. and European stocks were broadly higher during mid-morning trade. The DAX was up over 2% after news of the Fed’s decision. The FTSE 100 was up over 1%, and the CAC 40 climbed 2.41%.
In the U.S., futures indicated a higher opening. Shares rallied in Asia.
3. Oil Prices Rise
Oil prices hit a seven-week high on Thursday after new data showed U.S. crude supplies were lower for the third straight week. In Norway, the oil workers’ strike further boosted the commodity. The strike threatens to cut crude output out of the North Sea.
U.S. crude was up 43 cents to $45.77 per barrel. Brent added 37 cents, trading at $47.20 a barrel.
4. Gold Climbs
Gold was also up, reaching a two-week high after the Fed’s announcement.
The yellow metal was trading at $1,339.30 mid-morning, its highest level since September 8.
Gold is sensitive to U.S. rates and becomes less attractive to yield-seeking investors when rates are higher. The Fed’s less-aggressive approach to rate increases is seen as less of a threat to the yellow metal’s pricing.
