The FOMC meeting this morning saw the Federal Reserve (Fed) meet expectations of a 75 basis point hike, the biggest gain since 1994, helping stocks enter a rally during a volatile trading session.
Investors were seen breathing a sigh of relief as the US central bank fulfilled its forecast with a rate hike in controlling inflation and the Fed's expectations regarding the economic slowdown in the next two years.
Nonetheless, the market remained volatile as some investors tried to weigh the risks of a possible price spike if inflation were controlled.
Comment Jake Dollarhide of Longbow Asset Management, the market is divided between rate hikes to control inflation but will cause prices to rise.
During the Wall Street trading session, equities extended gains after a pullback following the rate announcement with the Dow Jones Industrial Average up 1.8%, the S&P 500 reaching 1.3%and the Nasdaq Composite up 2.9%.
MSCI's worldwide share benchmark also rose 1.13%.
Treasury yield also entered a rally despite volatile trading with the benchmark 10 -year treasury yield up 3.421% and 2 -year treasury yield reaching 3.441% but still below yesterday's high of 3.456%.
Meanwhile, the dollar weakened as soon as the Fed announced with its index down 0.11% and helping the Euro post gains at $ 1.04205.
Meanwhile, Fed Chairman Jerome Powell confirmed the possibility of another 50 or 75 basis points hike at the next policy meeting, besides stating that the economy is ready to accept tighter policy.
On the other hand, world stocks fell more than 20% but rose slightly before the FOMC meeting in support of the European Central Bank's (ECB) surprise announcement.
The ECB is said to be working to maintain the debt crisis due to rising borrowing costs by supporting member countries with high debts and devising new tools to reduce risk.
Despite the ECB’s announcement, investors thought it was not a bold enough move and that Italian, Spanish and Portuguese state government bond yields, which would benefit from the ECB, would retreat.
As for commodities, Brent crude was down $ 2 at $ 119.04 while US crude lost $ 3 at $ 118.93.
Gold jumped 1.4% to $ 1,830.41 an ounce with the help of the Fed’s announcement.
