NEW YORK: US equities reached a five-month high as investors reacted to a dovish lurch by policy makers in the world’s largest economy.
The dollar rebounded after a four-day skid, while government bonds stabilized. West Texas crude and gold declined.
After the Federal Reserve announced yesterday that it had no plans to raise rates in 2019, stocks resumed the year’s upward charge.
The S&P 500 Index staged a broad-based advance Thursday that saw tech shares climbing alongside the real estate and consumer sectors.
Financials sat out the rally as the yield on 10-year Treasuries came off the lowest level in more than a year after sharp declines Wednesday.
“It’s a confirmation that the market was right that we didn’t need such aggressive Fed policy,” said Hank Smith, co-chief investment officer at Haverford Trust, which manages $8.5 billion.
“The expectation is the Fed is out of the picture for the remainder of the year. That risk, if you want to call it that, is off the table and now we move to trade.”
Brazil’s Ibovespa stock index retreated and the real sank after former Brazilian president Michel Temer was arrested as part of the “Carwash” corruption probe, clouding the outlook for the government’s key economic reforms.
Elsewhere, sterling pared its decline after the EU was said to consider giving British Prime Minster Theresa May an unconditional Brexit extension until May 7.
The current impasse over her current proposal, so close to the March 29 deadline for the U.K. to exit the bloc, threatens to increase the chances of a no-deal departure. A rate hold by the Bank of England had little impact on the currency. - Bloomberg
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