dglobalnews.com Dovish Fed boosts emerging assets, stocks at 20-month high
Published: Sun, March 19, 2017
Markets | By Armando Jensen

Dovish Fed boosts emerging assets, stocks at 20-month high

Dovish Fed boosts emerging assets, stocks at 20-month high

US stocks slid as investors assessed the Federal Reserve's path for interest rates and utility and health-care shares weighed on the market. "I would expect gold to trade in a wide band of $1,190 - $1,230 between the French elections and US Federal Reserve meeting in May", said Jiang Shu, chief analyst at Shandong Gold Group.

The Dow Jones Industrial Average rose 96.65 points, or 0.46 percent, to 20,934.02, the S&P 500 gained 16.79 points, or 0.71 percent, to 2,382.24 and the Nasdaq Composite added 35.65 points, or 0.61 percent, to 5,892.47.

The index was down nearly 1 percent overall for the week and 1.2 percent since the Fed hiked rates on Wednesday.

Japan's Nikkei 225 is down 0.2 percent Wednesday while Germany's DAX is 0.1 percent higher. But a higher USA budget deficit is likely to dampen that view.

Yields ticked higher as bond prices fell. Investors had been nervous about Wednesday's Dutch election, where politicians had railed against the European Union and immigration.

Analysts said the election this week in Holland had calmed concerns over political risk in Europe, as Dutch center-right Prime Minister Mark Rutte fought off the challenge of anti-Islam and anti-EU rival Geert Wilders. After the United Kingdom vote last summer to leave the European Union, investors were anxious about whether a wave of nationalism across the continent could eventually break the European union apart.

YIELDS: Treasury yields dipped, dropping once again after the Fed on Wednesday gave a more measured forecast for interest-rate increases than some investors expected.

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Bullion traders said a firm trend overseas despite the rate hike by the US Federal Reserve amid increased buying by local jewellers, mainly led to a rally in gold prices.

The S&P 500 was virtually flat at 2,382, as of 10 a.m.

A widely anticipated US interest rate hike combined with a dovish outlook for the future path of rates lifted emerging stocks to 20-month highs on Thursday but also prompted a number of developing central banks to tighten monetary policy. It was the eighth drop in the last nine days.

Outgoing policymaker Kristin Forbes unexpectedly voted to raise rates and the minutes said that some among the majority who kept them at a record low felt it would take a slight further rise in inflation for them to follow suit.

The pound dipped against the euro this week as the Brexit bill allowing the Government to trigger Article 50 passed through the Houses of Parliament with no amendments.

While U.S. officials actually raised short-term interest rates by a quarter of a percentage point-to a range between 0.75% and 1%-the decision came as no surprise for investors, on the back of earlier statements and positive economic data.

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