Stocks up as investors await Fed rate hike

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Stocks up as investors await Fed rate hike

As investors prepared for the Federal Reserve's interest rate decision later Wednesday, the US stock prices went up as concerns over financial stability eased and as investors prepared for the decision to make their own.

None of the Swiss are on the hook for $1,500 each on Credit Suisse Bailout.

In Australia and Japan, stocks went up while the Hong Kong futures advanced. Contracts for the S&P 500 were flat after the index increased by 1.3% Tuesday, while the tech-heavy Nasdaq 100 rose 1.4% as the two US benchmarks posted a second day of gains.

Australian and New Zealand bond yields went up, as the action was tracked in the Treasury market on Tuesday. The two-year Treasury yield went up 19 basis points in whipsawing trade, the 10 year yield climbed 12 basis points and the index of the dollar was little changed.

The sale of government bonds and rising stock prices indicated a renewed appetite for risk taking as investors looked for signs of stability after the collapse of three US banks and UBS Group AG's takeover of Credit Suisse Group AG.

Treasury Secretary Janet Yellen said that the US government could backstop deposits at other US banks, as it did with Silicon Valley Bank. After market pricing was split between a hike and a pause earlier in the week, traders placed greater odds that the Fed will raise interest rates by 25 basis points.

Fed officials will issue updated rate projections for the first time since December, giving guidance on whether or not they expect additional hikes this year.

Nicholas Colas, co-founder of DataTrek Research, said that this is an easier market backdrop. Expectations of a dramatic about-face for monetary policy are diminishing. Market expectations for near-term Fed rate decisions are now within the realm of possible. That is good news. Every stock in a measure of US financial heavyweights climbed. The First Republic Bank surged almost 30% - its best day ever - amid optimism over a new plan under discussion to aid the regional lender. The stock is not close to the level of a few weeks ago.

Many were not willing to make a statement on the financial stability concerns of the past weeks. Michael Wilson Morgan Stanley's chief US equity strategist said that the risk of a credit crunch is increasing. The Bank of America's latest global survey, which polled fund managers between March 10 - 16 showed that a systemic credit event has replaced stubborn inflation as the key risk to markets.

Asia-listed energy companies were helped by a rally in the price of oil. After a 2.5% rise on Tuesday, West Texas Intermediate, the US oil price, moved higher on Wednesday. The energy sector led gains in Australian shares Wednesday, echoing the sector's lead in the S&P 500 on Tuesday.

Some of the main moves in markets: None The yield on 10 year Treasuries fell two basis points to 3.59%

The story was produced with the help of Bloomberg Automation.

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