Wall Street extended gains on Fed hike

Wall Street extended gains after the US Federal Reserve raise its key interest rate. Photo / AP
Wall Street extended gains after the US Federal Reserve raise its key interest rate. Photo / AP

Wall Street extended gains after the US Federal Reserve raise its key interest rate, as had been widely expected, and reiterated that further increases will follow a gradual path.

The central bank lifted its target overnight lending rate to a range of between 0.75 per cent and 1 per cent, the Federal Open Market Committee said in a statement. Voting against the action was Neel Kashkari, who preferred at this meeting to maintain the existing target range.

"In view of realised and expected labour market conditions and inflation, the committee decided to raise the target range for the federal funds rate," the FOMC said in a statement.

"Near-term risks to the economic outlook appear roughly balanced," the FOMC noted. "The committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run."

Wall Street rose. In 2.08pm trading in New York, the Dow Jones Industrial Average rose 0.5 per cent, while the Nasdaq Composite Index gained 0.6 per cent. In 1.53pm trading, the Standard & Poor's 500 Index added 0.4 per cent.

US Treasuries also gained, while the greenback fell, as the Fed maintained its forecast for a total of three rate hikes this year.

"The Fed has come to use a new term that they will use the window when they have it," Henrik Drusebjerg, chief strategist at Carnegie Investment Bank, told Bloomberg before the Fed announcement. "If the economy is strong, they will continue hiking."

The Dow advanced, led by gains in shares of UnitedHealth and those of JPMorgan Chase, up 1.3 per cent and 0.8 per cent respectively.

A report from the National Association of Home Builders/Wells Fargo showed that confidence among US homebuilders climbed in March to reach the highest level since 2005.

Oil prices rose following an Energy Information Administration report showing a surprise drop in US crude stockpiles last week, the first weekly decrease since December.

"For those looking for a rebalancing of the oil market the message is that they should be patient, and hold their nerve," the IEA said in its monthly report, according to Reuters.

In Europe, the Stoxx 600 Index finished the day with 0.4 per cent advance from the previous close. Germany's DAX Index rose 0.2 per cent, as did the UK's FTSE 100 Index and France's CAC 40 Index.

In the Netherlands, the benchmark AEX Index rose 0.3 per cent. Dutch voters headed to the polls in a general election as the latest polls showed a decline in support for Geert Wilders' anti-Islam, anti-European Union Freedom Party.

- BusinessDesk

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