U.S. shares posted their largest daily gain on Wednesday’s trading session after the Federal Reserve indicated that a December interest rate is likely in its October meeting, giving investors and traders the ability to prepare for the shift after a decade of low U.S. interest rates. The Federal Reserve minutes revealed that most Fed members support a rate hike next month, though no decision has been made as of yet, stressing the importance of positive economic data releases as a prerequisite.
The Dow Jones Industrial Average added 247.66 points, or 1.4%, to trade at 17,737.16. The S&P 500 gained 33.14 points, or 1.6%, to trade at 2,083.58 and the Nasdaq Composite rose 89.19 points, or 1.8%, to close the day at 5,075.2. Financial stocks rallied on the prospect of higher profit gained from larger difference between the amount banks charge on loans and what is paid for deposits. The S&P’s 500 financials sector rose 1.8%, led by JPMorgan Chase & Co (N:JPM) and the Goldman Sachs Group (N:GS) adding 2% and 1.6%, respectively. Apple (O:AAPL) also posted marked gains, lifting indexes. The tech-giant’s shares rose 3.2% to 117.29 after bullish comments from Goldman Sachs expecting that the company will create recurring revenue streams from its services. Apple’s gain alone was responsible for 24 points added to the Dow Jones.
Asian shares followed Wall Street’s lead with significant gains. The Bank of Japan chose to maintain its current easing programs in place, though some expect an expansion of the current policy in an effort to bolster inflation. The Japanese Nikkei 225 gained 1.07% despite some disappointing data on the country’s imports and exports. MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.98% and the CSI 300 index of the largest listed companies in Shanghai and Shenzhen added 0.9%.
In currencies, the dollar declined despite the prospect of an interest rate increase. The dollar index, comparing the greenback to six of its major peers, has moved 0.5% lower from a seven-month peak. The euro gained ground the dollar, edging up to $1.0707, up from a seven-month low. The dollar moved lower against the Japanese yen to 123.25 after touching a three-month high of 123.67.
This week’s major economic data releases continue today with UK retail sales data, U.S. oil inventories and jobless claims, followed by more comments from Federal Reserve officials later in the day. On Friday, the European Central Bank’s president Mario Draghi will discuss monetary policy, followed by Canadian inflation data later in the day.