Over 40 years’ heritage
185,800 clients worldwide
Over 15,000 markets

After the US rate decision, markets have failed to rally into new highs

What was interesting was the rally into a new intraday high prior to the rate decision everyone was expecting, and had been priced into the bond market over the previous three months.

Federal Reserve
Source: Bloomberg

Following the Federal Open Market Committee (FOMC) statement to raise 0.25%, the equity markets went into sell mode. If we keep this in perspective, the S&P 500 has rallied over 5% in the 30 days since Donald Trump was elected on 8 November.

It could be argued that the market has moved well ahead of itself and was due for a pull back. At the close of US markets, the S&P was down 0.8%.

The two-hour S&P 500 chart below shows the 2278 high from Tuesday night, with last night unable to move higher before the FOMC decision. It is important to notice the support level of 2252 was breached last night, however the market closed above this level with only a small retest at 2253 from the inside period. The final candle of the session into the 4pm close has a high close.

The key level in tonight’s session is the 2252 support. A closing session below this level could see a further sell off to test daily support at 2218.

US 500
Click to enlarge

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts