Equities rebound as Brent eases from US$110 and the 10-year Treasury yield falls to almost 5%
Equity markets rebounded on Thursday, one day after the US Federal Reserve raised its benchmark rate for the first time since 2023.
The Dow Jones Industrial Average rose 316.14 points, or 0.61 percent, to 51,778.04, CNBC reported, with the S&P 500 up 1.14 percent at 7,637.76 and the Nasdaq Composite up 1.69 percent at 26,418.30.
The Associated Press described it as the market's best day in six weeks.
The S&P/TSX composite index closed up 382.99 points at 35,874.26 on Thursday, on gains in the mining sector, the Canadian Press reported.
The Canadian dollar traded at 71.49 cents US, down from 71.70 cents US on Wednesday, and the December gold contract gained US$12.20 to close at US$4,399.70 an ounce.
Robert Conzo, chief executive officer at The Wealth Alliance, told CNBC the market's reaction could be summed up in one word, "relief."
He said the market still faces the possibility of "extreme" volatility depending on how the conflict in the Middle East unfolds.
The decision "should reassure stock and bond investors worried about inflation running out of control and pushing longer-term yields higher," David Russell, global head of market strategy at TradeStation, said in commentary sent to Wealth Professional.
The Fed, he said, "is walking the line between complacency and extreme hawkishness."
Tiffany Wilding, economist at PIMCO, wrote in an email to Wealth Professional that Warsh's description of the move as removing a "dose" of accommodation "is a departure from other FOMC members' characterizations of policy as neutral to slightly restrictive," and that the Fed is likely to follow with additional tightening.
Ed Hutchings, head of rates at Aviva Investors, told Wealth Professional the market is right to expect more hikes, but whether it matches "the 100bps of hikes priced ahead of the meeting is clearly debatable."
He said the situation warrants caution around US Treasuries, with bonds from other geographies looking "somewhat more attractive."
Etienne Bordeleau-Labrecque, vice president and portfolio manager at Ninepoint Partners, wrote in commentary sent to Wealth Professional that the BoC has already pivoted hawkishly.
He wrote that Canada is the only G7 economy where core inflation is at target.
Brent crude settled one percent lower at US$104.82 a barrel, down from close to US$110 earlier in the week, the Associated Press reported.
CNBC attributed the decline to easing supply concerns after Saudi Arabia reportedly made more crude cargoes available to Asian refiners through ship-to-ship transfers near the Sohar port in Oman.
The yield on the 10-year US Treasury fell to 4.93 percent from 5.01 percent late Wednesday, the Associated Press reported.
It had closed above 5 percent on Wednesday, its highest closing level since 2007, according to CNN.
The Federal Open Market Committee approved the quarter-point increase on a 12 to 0 vote, lifting the target range to 3.75 to 4 percent.
Sixteen of the 18 policymakers who submitted projections penciled in at least one further hike this year, the Associated Press reported.
"The striking feature of the dot plot is the disappearance of the doves," analysts at Evercore ISI said in a note cited by Reuters.
