Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


While you were sleeping: US equities, bonds rise on Fed

While you were sleeping: US equities, bonds rise on Fed

June 19 (BusinessDesk) – Both US equities and Treasuries rose after the Federal Reserve said the American economy remained on an upward path, yet downgraded its 2014 growth forecast and indicated interest rates will remain low for longer.

“Economic activity is rebounding in the current quarter and will continue to expand at a moderate pace thereafter,” Fed Chair Janet Yellen said in a post-meeting statement. “Overall, the (Federal Open Market) Committee continues to see sufficient underlying strength in the economy to support ongoing improvement in the labour market.”

As had been widely anticipated, the Fed reduced its bond-buying program by US$10 billion for a fifth straight month, lowering it to US$35 billion.

In its quarterly economic projections, the policy committee downgraded its growth forecast for 2014 to between 2.1 percent and 2.3 percent, from a March forecast for a pace of expansion between 2.8 percent and 3.0 percent.

"Steady as she goes, with respect to policy," Kim Rupert, managing director at Action Economics in San Francisco, told Reuters. "A lot of the doves want to make sure the recovery is for real and is in place and (are) still maintaining a very accommodative posture."

In the final hour of trading in New York, the Dow Jones Industrial Average rose 0.44 percent, the Standard & Poor’s 500 Index added 0.51 percent, while the Nasdaq Composite Index increased 0.33 percent.

Gains in shares of Coca-Cola, up 1.3 percent, Wal-Mart and Nike, both up 1.1 percent, led the Dow higher.

US Treasuries also gained, pushing yields on five-year notes 5 basis points lower to 2.60 percent.

“The Fed is getting much more realistic with regards to the slower path of growth than it had been previously -- it reflects the idea that the longer-run growth path will be lower,” George Goncalves, the head of interest-rate strategy at Nomura Holdings, one of the 22 primary dealers that trade directly with the Fed, told Bloomberg News.

The Fed kept its key benchmark rate steady at a record low 0.25 percent.

“The Committee anticipates that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and longer-term inflation expectations remain well anchored,” Yellen said.

Meanwhile, shares of FedEx climbed, last up 5.3 percent, after the company lifted its full-year profit outlook. FedEx is considered an economic bellwether.

"An outstanding fourth quarter helped FedEx post solid results for fiscal 2014, and we believe we are well positioned for a strong fiscal 2015," Frederick Smith, FedEx chief executive officer, said in a statement.

In Europe, the Stoxx 600 Index ended the session with a 0.1 percent decline from the previous close, as did France’s CAC 40. Germany’s DAX rose 0.1 percent, while the UK’s FTSE 100 increased 0.2 percent.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Land & Water Forum: Fourth Report On Water Management

The Land and Water Forum (LWF) today published its fourth report, outlining 60 new consensus recommendations for how New Zealand should improve its management of fresh water and calling on the Government to urgently adopt all of its recommendations from earlier reports. More>>



Welcome Home: Record High Migration Stokes 41-Year High Population Growth

New Zealand annual net migration hit a new high in October as more people arrived from than departed for Australia for the first time in more than 20 years. More>>


Citizens' Advice Bureau: Report Shows Desperate Housing Situation Throughout NZ

CAB's in-depth analysis of over 2000 client enquiries about emergency accommodation shows vulnerable families, pregnant women and children living in cars and garages, even after seeking assistance from the Ministry of Social Development and Housing New Zealand. More>>


Speaking For The Bees: Greens Call For Neonicotinoid Pesticide Ban

The National Government should ban the use of controversial pesticides called neonicotinoids after evidence has revealed that even at low doses they cause harm to bee populations, the Green Party said today. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news