Stocks Rebound as Fed Hike Fails to Disappoint
Global stocks rebounded strongly on Thursday after pausing their recent slide, as investors digested the US Federal Reserve's interest rate hike and cheered lower oil prices. The global bond rout also took a breather, with bonds mostly rebounding.
The Fed's decision to raise interest rates was seen as a hawkish turn, but market expectations suggest that the hiking cycle of around 100 basis points would be the shallowest in history. The Atlanta Fed's GDPNow model is pointing to 5.1% growth in Q3, which would be the strongest non-pandemic-distorted quarter since 2000.
The Bank of England kept interest rates on hold but warned they might have to go up if the Iran war drags on, while predicting British inflation will top 4% early next year. The US Securities and Exchange Commission unveiled its exemption for companies to offer trading in blockchain-based or 'tokenized' stocks and other securities.
The morning after the night before saw investors relieved that the Fed's rate hike was not as severe as expected, but concerns over inflation and long-term borrowing costs remain. The Bank of England's plans to offload most of the remaining £488 billion of bonds on its balance sheet by 2034 may weigh on the gilt market.