US stock market advanced on Wednesday after Federal Reserve left the target range for its overnight lending rate in a range of 0.25% to 0.5%. The dollar weakened slightly, the live dollar index shows the ICE US Dollar index slipped 0.1% to 94.473. Investors anticipated the central bank would hold off raising interest rates and were anxious for clues when policy makers plan to hike rates. The central bank statement contained no guidance for likely timeline for rate hikes but suggested policy makers were in no hurry to tighten monetary policy further. At the same time Policy makers’ assessment of US economy outlook was slightly more upbeat than the one made at March meeting. While the Federal Reserve acknowledged economic activity had "slowed," it also said labor market conditions had "improved further" and noted “solid” gains in household income. And though the Fed said it “continues to closely monitor inflation indicators and global economic and financial developments", policy makers didn’t mention global economic and financial developments continue to pose risks as they said in previous statement. Traders revised the likelihood of a rate hike in June marginally higher to 23% from 21% prior to the Fed decision, according to CME's FedWatch tool. They continue to price in the first rate hike in September and a 22.9% probability for a second hike in December.
The Dow Jones Industrial Average closed 0.3% higher at 18041.55. The blue chip index’s gain was limited by a 6.3% slump in Apple shares (NASDAQ:AAPL) after the company late Tuesday reported quarterly revenue declined for the first time in 13 years, dropping 13% to $50.55 billion. The S&P 500 edged up 0.2% to 2095.15. In economic news the US trade deficit showed that the trade gap in goods fell to 9.5% to $56.9 billion in March. Pending home sales rose 1.4% in March, the second monthly increase. Today at 14:30 CET Initial Jobless Claims, Continuing Claims and advance first quarter GDP will be released in US. The tentative outlook is negative.
European stocks closed slightly higher on Wednesday for a second session in a row as investors waited for Fed’s decision. The euro traded higher against the dollar. The Stoxx Europe 600 index gained 0.3%. Germany’s DAX 30 closed up 0.4% at 10299.83. Both France’s CAC 40 and UK’s FTSE 100 rose 0.6%. Today at 11:00 CET April Industrial, Economic and Consumer Confidence Indices will be released in euro-zone. At 14:00 CET April preliminary Consumer Price Index will be released in Germany. The tentative outlook is negative.
Asian stocks are pulling back today from early gains after yen rallied 2.4% to ¥108.877 following the Bank of Japan surprise decision not to expand its monetary stimulus program even as prices slipped deeper into deflationary territory. The Nikkei slumped 3.6%, closing with a 5.1% decline for the shortened trading week. The market is closed for a national holiday on Friday. Earlier in the session, the Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.25%, but reiterated further easing may be needed given weak inflation.
Oil futures prices are edging lower today as traders booked in profits after prices rose on Wednesday to their highest levels for 2016. June Brent crude rallied 3.2% to $47.18 a barrel on London’s ICE futures exchange on Wednesday. Traders focused on the 15000 barrels a day decline in domestic US oil production to 8.938 million barrels and a 5.6% rise in implied gasoline demand over the last four weeks from the same time last year even as US crude stockpiles rose 2 million barrels in the past week.