The three major indices on the New York Stock Exchange rose all at once on the 17th (local time). Uncertainties surrounding the US Federal Reserve’s (Fed) rate hike have dissipated and the Russian default (default) crisis has resolved, supporting the stock market.
On the New York Stock Exchange (NYSE), the Dow closed at 34,480.76, up 417.66 points (1.23%) from the previous day. The Nasdaq Composite, centered on technology stocks, rose 178.23p (1.33%) to 13,614.78, and the S&P 500 rose 53.81p (1.23%) to 4,411.67.
Eleven sectors of the S&P 500 also rose at the same time. △Consumer discretionary 1.86% △Consumer staples 0.59% △Energy 3.48% △Financial 1.23% △Health care 1.61% △Industry 1.34% △Raw material 1.95% △Real estate 1.36% △Tech stock 0.69% △Communication service 0.94% △Utility 0.46%, etc. am.
Federal Reserve Chairman Jerome Powell[사진=EPA·연합뉴스]
The Fed raised its benchmark interest rate for the first time since 2018 to counter inflation. After the regular meeting of the Federal Open Market Committee (FOMC) in March, the federal funds rate, the benchmark interest rate in the United States, was raised to 0.25-0.5%, a 25bp (1bp=0.01%) increase from the previous level. It also hinted that interest rates might be raised at all of the remaining six meetings this year, and noted that the balance sheet contraction might also start earlier than expected.
Although the interest rate decision was made at the level expected by the market, experts evaluated that the prospect of a future rate hike was more hawkish than expected. However, oil prices continued to rise on expectations that the Fed might successfully respond to inflation and that it might not be able to raise interest rates as much as expected considering the US economic growth rate.
The yield on the 10-year U.S. Treasury fell to 2.167% from 2.187% the previous day.
Meanwhile, reports that Russia, which had been hit by a default crisis, overcame the crisis by paying interest on dollar-denominated bonds maturing on the 16th also supported investor sentiment. Archyde.com, citing sources familiar with the situation, said some creditors had been paid interest in dollars on bonds maturing this week. Previously, Russia continued to argue that it might pay interest on foreign currency denominated bonds of $11,700 (regarding 143.3 billion won), which matured on the 16th, in rubles, raising anxiety regarding the default crisis.
“The S&P 500 is up for the third day in a row,” said Jeff Kilberg, chief investment officer at Sanctuary Wells. It was reported to CNBC, a professional media outlet.
But news that progress had not been made in the peace talks between Russia and Ukraine limited the gains. Earlier, foreign media, including the Financial Times (FT), reported that the two countries had made progress in discussions on a tentative peace plan consisting of five items. However, hopes for a ceasefire faded following Russia denied it.
The yield on the 10-year U.S. Treasury fell to 2.167% from 2.187% the previous day.
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), also known as the ‘Wall Street Fear Index’, fell 3.75% to 25.67.
Stock markets in major European countries showed mixed results, watching the decision of the key interest rate and Russia’s invasion of Ukraine.
The London Stock Exchange’s FTSE 100 index rose 93.66 points (1.28%) to 7385.34 from the previous day. Germany’s Frankfurt Stock Exchange’s DAX Index fell 52.68p (0.36%) to 14,388.06, and the Paris Stock Exchange’s CAC40 Index rose 23.88p (0.36%) to close at 6612.52. The pan-European Euro Stoxx50 index closed at 3885.32, down 4.37p (0.11%) from the previous day.
International oil prices soared as the International Energy Agency (IEA) analyzed that restrictions on imports of Russian crude might have a bigger-than-expected impact on the market.
On the New York Mercantile Exchange (NYMEX) in the United States on the same day, the West Texas Intermediate (WTI) for April contract closed at $102.98 per barrel, up $7.94 (8.35%) from the previous day. As of 6:34 pm Korean time, the May Brent crude oil price for May on the London ICE Futures Exchange rose by $8.90 (9.08%) to $106.92 per barrel, the highest level since October 2018.
According to the International Energy Agency (IEA) on the 16th (local time), regarding 3 million barrels of Russian crude oil and refined products might disappear from the market starting in April. This is three times the market forecast of regarding 1 million barrels per day. According to the IEA’s monthly oil report, “Russia’s total exports fell by 2.5 million barrels per day,” adding that “crude oil accounted for 1.5 million barrels and refined petroleum products accounted for 1 million barrels.” “If sanctions are tightened or public condemnation (for the invasion of Ukraine) grows stronger, exports might decline even more,” he added.
The market is raising concerns. “There is a renewed concern that the market might lose Russian crude,” John Kilduff, a partner at Again Capital, told Archyde.com.
Gold prices rose. On the New York Mercantile Exchange (COMEX) on the same day, the price of gold futures for June delivery rose by $34.00 (1.78%) per ounce to close at $1943.20.
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- Hye-won Jang
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