The day after the night before

European markets are still up on the day, but US markets have faltered as some of the post-Fed excitement evaporates.

Federal Reserve building
Source: Bloomberg

Yesterday’s decision by the FOMC to increase interest rates was expected, but the convictions of its future actions have given global equity markets the sort of boost required to revive beliefs in Santa – or at least his rallies. As has been the case all too frequently the FTSE has been unable to fully enjoy the move higher, as its disproportionate weighting of energy and mining companies has acted as a drag. The bounce that equity traders are enjoying however, has only managed to see 50% of December’s collapse clawed back so far.

Once again the usual suspects of Anglo American and Glencore are the biggest fallers, as they continue to slug it out in an effort to claim the title of worst  performing FTSE stock of 2015. Standard Chartered’s decision not to increase prime lending rates, even after Hong Kong’s central bank raised the base rate charge, has been welcomed by the markets sending the Asian based financial house soaring by more than 6.8%.

Not only did the FOMC deliver, as promised by Janet Yellen, it also gave every indication that this was not going to be a ‘one and done’ step as some analysts had foreseen. Although intraday breaks of $1.50 in GBP/USD have occurred several times in the last month it is considerably more likely that this current bearish move will last substantially longer.

With the dollar strengthening, the subsequent sell off in commodities was inevitable as further pressure has been brought to bear on energy prices along with both base and precious metals. 

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