Stock markets this morning are extending their impressive gains seen so far this week, with the FTSE100 up by 38 points. The decision from the Federal Reserve to keep rates on hold - as well as some fairly significant downward revisions to the forecast for rates going forward - has seemingly allayed recent fears and put the ball back in the bulls’ court.
Commodities outperform as USD drops
Whilst expectations for a rate hike were relatively low heading into the meeting - approximately 20% according to derivatives markets - the lowering of the median on the dot plot shows a lower future rate path with the average showing two in 2017.
Precious metals such as gold and silver reached their highest level in over a fortnight shortly after the decision as the recent sell-off appears to have been halted. Oil benchmarks received a double boost with not only the depreciating greenback but also a large and unexpected drawdown in US inventories helping the bid from Tuesday’s low - which was the lowest in over a month - to gain traction.
Stocks add to recent gains
The biggest gainers on the FTSE100 today all come from the commodity sector with Randgold Resources (LON:RRS) up by more than 4%andleading the way higher at the time of writing. BHP Billiton (LON:BLT), Glencore (LON:GLEN) and Anglo American (LON:AAL) are all firmly in the green as the announcement from the Fed last night has seen the US dollar decline.
Some of the strong gains seen yesterday in the banking sector have been given back this morning, with HSBC (LON:HSBA), RBS (LON:RBS) and Lloyds (LON:LLOY) the worst performing stocks on the index.