Confirmation of pending rate hike fails to dampen US markets

By Trevor Hoey. Published at May 25, 2017, in Features

US markets made solid gains despite comments from the Federal Reserve regarding the likelihood of a rate rise in June, as well as a reinforcement of commentary on the need to address the Central Bank’s balance sheet.

There were also global factors that could have placed a drag on the index, notably Moody’s downgrade of China’s credit rating from Aa3 to A1. However, the fact that Asian markets quickly shrugged off the news provided a measured lead for other overseas markets.

In the US, the Dow gained 0.4% to close at 21,012 points. The NASDAQ delivered a similar proportionate increase, closing at 6163 points.

European markets were mixed with the FTSE 100 gaining 0.4% to close at 7514 points, while mainland European markets came off marginally.

That DAX fell 0.1%, closing at 12,642 points.

The Paris CAC 40 closed at 5341 points, representing a decline of 0.1%.

On the commodities front, oil continued to find support in early morning trading, hitting a high of US$51.88 per barrel, but gave up all of those gains plus some in afternoon trading as it closed at US$51.30 per barrel.

Iron ore was the biggest casualty overnight as it closed at US$60.52 per tonne, representing a fall of 2.4%.

After starting weaker, gold made a strong run in afternoon trading to finish up 0.4% at US$1261 per ounce.

Base metals suffered across-the-board declines with nickel being the worst hit as it came off 2.3% to close at US$4.11 per pound.

Copper fell approximately 0.5%, closing at US$2.56 per pound.

There were only marginal declines in zinc and lead with the commodities closing at US$1.18 per pound and US$0.93 per pound respectively.

The Australian dollar strengthened significantly against the US dollar, increasing from circa US$0.745 to push above the US$0.75 mark.

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