Fed keeps rates on hold despite positive economic conditions

Published 02-FEB-2017 14:50 P.M.

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2 minute read

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Perhaps reflecting the unpredictable political and economic environment that has emerged since Inauguration Day, the Fed Reserve has kept rates on hold despite providing a raft of reasons why recent data would support a rate rise.

These included a continued strengthening in the labor market, expansion in economic activity, increased job gains, low unemployment, moderate rises in household spending and improved consumer and business sentiment.

Having previously flagged up to 4 rate rises in 2017, the Fed will now have to wait until March to reassess the situation.

In the wake of this news the Dow flatlined to finish at 19,890 points while the NASDAQ posted a gain of 0.5% to close at 5642 points after strong performances from Apple Inc and Facebook.

The FTSE 100 was relatively unmoved, with all the money flowing into the betting shops as punters wagered heavily on the prospect of President Trump being impeached, not making it through the first year or not going full-term, along with a wide range of other scenarios. Not visiting the UK has been the big shortner.

While markets in mainland Europe rallied with the DAX and the Paris CAC 40 both up approximately 1%. One of the big news stories in Germany was a lift in earnings guidance by Siemens, resulting in its shares rallying approximately 5%.

On the commodities front, oil rallied 1.4% while gold was relatively flat. Iron ore was also unmoved, hovering in the vicinity of US$83 per tonne.

Base metals were mixed with zinc once again inching up to the US$1.30 per pound mark, while copper retraced slightly after spiking to US$2.71 per pound in the previous session.

Nickel was the best performing base metal, rallying more than 3% to finish at US$4.62 per pound.

Lead was down approximately 1.5%, but remains above US$1.05 per pound.

The Australian dollar was fetching US$0.758 as US markets drew to a close.

It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.



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S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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