Daily Analysis – Markets Rally, Dollar Tumbles on Fed Statement |
Equities
Asian markets once again ended mixes, as the Nikkei rallied 1.4%, following US markets higher, while the ASX dropped .8% as the market reopened for the first day this week. In China the Shanghai Composite and Hang Seng both lost .5%.
European markets ended mostly higher, as the CAC40 rose .6% and the Dax rallied .7%. The FTSE closed flat, as Barclay’s steep 4.8% drop weighed on the index after announcing weak earnings.
In the US, Bernanke’s commitment to continued easing sent stocks higher, as the Dow rose 9 6 points to 12691, and the Nasdaq gained .8%.
Amazon shares jumped 7.9% after raising revenue guidance. The stock had fallen nearly 2% after hours on Tuesday when the company first released its earnings data.
Broadcom tumbled 12.3% after cutting revenue forecasts. Several brokerages cut their ourlook on the stock.
Treasuries and Commodities
Bonds fell as the Fed acknowledged that inflation was becoming more significant. 10-year notes fell 11/32 to yield 3.35% and 30-year notes sank 1 1/32 to yield 4.45%.
Commodities jumped following the Fed’s announcement. Oil rose 1.11 to 113.32, and gasoline futures jumped 2.4% to 3.4392.
Gold soared 24.50 to a new record close of $1529.60, and silver bounced back from Tuesday’s selloff, surging 6.7% to 48.05.
Agricultural futures struggled, as wheat sank 4.2% and cotton fell 3.8%.
Currencies
The Fed’s comments sent the dollar tumbling. The Euro jumped 1% to 1.4790, and the Pound rose .9% to 1.6635, both at fresh highs for the year. The Australian dollar rallied .7% to 1.0868, while the Canadian dollar and Swiss Franc eased less than .1%.
Dollar Sinks to 3-Year Lows Following Fed
Economic Outlook
Durable Goods Orders rose 2.5%, more than expected, while mortgage applications fell.
The Fed said GDP growth would be lower than expected, and said the US economy needed continued stimulus. Although inflation was increasing, it remained low enough to not be a primary concern.
Thursday’s reports will include GDP, Pending Home Sales, and weekly jobless claims.
Earnings are due from ExxonMobil, P&G, Bristol-Myers, Microsoft and Motorola.
-Bradley Welcher
About the author: BinaryOptionStrategy- David Frank
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