Market Wrap: Center Stage for Central Banks

by | 14 Dec, 2017

The Federal Reserve building in Washington D.C.

Global markets fell today after the Federal Reserve raised interest rates, in what was Janet Yellen’s last major act as Chair of the central bank. Yesterday the FOMC increased the target range for the federal funds rate to 1.5% from 1.25%, while another 3 rate rises for 2018 and 2 in 2019 are widely expected under new Trump’s new Chair pick, Jerome Powell.

China’s central bank also followed suit today by raising its own rates, representing a modest rise to borrowing costs, the first of its kind since March. The nudge up in money market rates may be seen as a move by the central bank to defuse financial risks (excessive debt and leverage levels for businesses) without putting the economy in danger.

The European Central Bank and Bank of England are due to announce their final policy decisions for the year later today, but rates are likely to be kept on hold unlike in China and the USA.

Asian Stocks Decline while Australia Posts Robust Jobs Growth
Most Asia-based indices were lower at the close of trading Thursday, while Asian currencies rose against the dollar, as a more guarded outlook on the US economy from the Federal Reserve put pressure on the greenback.

Australia’s ASX200 finished at 6,011.30 points, lower than for the rest of the week, despite outstanding news for the Australian economy. The country generated 61,000 new jobs in November despite forecasts of only 19,000, rising the most in 2 years and extending a dream run of 14 months of gains!

Australia’s jobs growth rate is at 3.2%, more than double that of the US pace of 1.4%. Perhaps Trump should take notes from Aussie Prime Minister Malcolm Turnbull, who said today that his governments policies were “restoring confidence to business, and business is responding by investing, creating more jobs and hiring more workers.”

Meanwhile stateside, Trump is promising his tax cuts will be passed before Christmas.

UK Data
In the UK, retail sales released Thursday jumped in November by 1.1%, reflecting Black Friday bargain hunting by shoppers. The Pound rose off the back of the upbeat sales numbers and ahead of the BoE’s decision later, but Commerzbank strategists said the currency is likely to lose some ground again due to Brexit negotiations, hours after Conservative rebels in the British parliament defeated the government in a key Brexit vote, leaving Prime Minister Theresa May weakened again.

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ALL RIGHTS RESERVED © INVSTR LTD. 2017

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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