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What’s happening: US stocks ended sharply higher on Wednesday after the Federal Reserve’s monetary policy decision.
What happened: All three major US stock indices climbed, with the tech-heavy Nasdaq 100 leading the gains.
The release of data on mortgage rates also supported stock market sentiment.
Why it matters: US stocks have been under pressure this year due to fears of President Donald Trump’s tariff moves triggering a trade war and a resultant recession in the country.
The Federal Reserve held its benchmark interest rates steady on Wednesday, as was widely expected. US stocks made strong moves after the central bank’s Chairman Jerome Powell projected two rate cuts this year.
Markets also responded to Powell’s comments suggesting that the inflation impact of the latest tariffs is likely to be “transitory” and that the risk of the US economy slipping into recession remains low.
The US Mortgage Bankers Association released data on the 30-year mortgage rate on Wednesday. The average contract interest rate for 30-year fixed-rate mortgages rose to 6.72% in the week ended March 14, from 6.67% in the previous period. Although this marked the first increase in nine weeks, the figure came in lower than the 6.97% reported in the same week in 2024.
Tesla’s stock climbed 4.68% to $235.86 on Wednesday. Shares of Google-parent Alphabet added 2.22% to close at $166.28 after the company announced the acquisition of cloud security startup Wiz to expand GCP’s security offering and compete better with AWS and Azure.
Nvidia’s stock gained 1.81% to $117.52 after news of the company joining a $30 billion AI investment consortium backed by Microsoft. Shares of Microsoft rose 1.12% to $387.82.
Nasdaq 100 climbed 1.41% to close at 17,750.79 on Wednesday. The S&P 500 added 1.08% to 5,675.29, while the Dow Jones index rose 0.92% to 41,964.63.
What to watch: Investors await data on current account (1630 UAE Time), initial jobless claims (1630 UAE Time), the Philadelphia Fed Manufacturing Index (1630 UAE Time) and existing home sales (1800 UAE Time) from the US today.
The US reported a record high current account deficit of $310.9 billion in the third quarter of 2024, widening from $275.0 billion in the previous period and exceeding market expectations of $284 billion. The current account deficit is expected to widen further to $325.5 billion in the fourth quarter.
Initial jobless claims, which eased by 2,000 to 220,000 on the first week of March, is expected to rise to 224,000 in the second week. The Philadelphia Fed Manufacturing Index, which declined to 18.1 in February from 44.3 in January, is projected to fall sharply lower to 8.5 in March. Existing home sales in the US declined to an annualised rate of 4.08 million in January from 4.29 million in the previous month, is estimated to fall further to 3.95 million in February.
Context: Silver prices edged higher this morning, surpassing the key $34 resistance level.
Details: Heightened geopolitical and economic tensions have supported precious metal prices so far this year. With US President Donald Trump taking centre-stage in resolving the Russia-Ukraine conflict and the US administration unleashing a tariff war, markets have gravitated towards safe-haven options.
Continued weakness in the US dollar also supported the XAG/USD, as a lower greenback makes metals more attractively priced for foreign currency holders. The US dollar index, which measures the greenback’s value against a basket of major currencies, slipped 0.03% to 103.39 on Wednesday. The index has shed 2.76% over the past month.
Commodity analyst at Commerzbank, Carsten Fritsch, raised the yearend silver forecast to $35 an ounce, from his initial projection of $33 an ounce. In his report published on Tuesday evening Fritsch said that silver is “just about one dollar shy of the 12-year high reached nearly five months ago.” He added that he expects this level to be reached “soon,” given the ongoing rally in gold.
Silver prices rose 1.01% to $34.55 an ounce this morning. Gold rose by 0.71% to $3,062.70.
What to watch: Investors will monitor announcements related to the Russia-Ukraine conflict, with Putin giving his wish-list for agreeing to a ceasefire. Any announcements by the Trump administration will also remain in focus.
Other Markets: European indices closed higher on Wednesday, with the FTSE 100, CAC 40 and STOXX Europe 600 Index up by 0.02%, 0.70%, and 0.19%, respectively, and the DAX down by 0.40%.
Ukrainian President Volodymyr Zelenskyy said his country was “ready” to pause attacks on Russia’s energy network and infrastructure. The news sent the RUB/USD pair higher in forex trading this morning.
New Zealand’s economy contracted by 1.1% year-on-year in the December quarter, following a 1.6% decline in the prior quarter. The figure coming in better than expectations of a 1.4% contraction lent support to the NZD/USD forex pair.
Australia’s seasonally adjusted unemployment rate remained unchanged at 4.1% in February. Although the figure came in-line with expectations, the unemployment rate remaining at three-month highs sent the AUD/USD pair lower in forex trading this morning.
Brazil’s central bank raised its Selic rate by 100 bps to 14.25% in March exerted pressure on the BRL/USD forex pair.
The People’s Bank of China held its five-year loan prime rate for the fifth consecutive month in March. The CYN/USD remained broadly flat in forex trading this morning.
ECB President Lagarde Speech (1200 UAE Time) Taiwan’s export orders (1200 UAE Time), Hong Kong’s inflation rate (1200 UAE Time), Sweden’s inflation rate (1230 UAE Time), Switzerland’s interest rate decision (1230 UAE Time), Taiwan’s interest rate decision (1230 UAE Time), Italy’s construction output (1300 UAE Time), Poland’s employment growth, industrial production and PPI (1300 UAE Time), Eurozone’s construction output (1400 UAE Time), ECB’s Economic Bulletin (1500 UAE Time), South Africa’s building permits (1500 UAE Time), UK’s industrial trends orders (1500 UAE Time), Turkey’s foreign exchange reserves (1530 UAE Time), Mexico’s aggregate demand and private spending (1600 UAE Time), UK’s interest rate decision (1600 UAE Time), Canada’s PPI and raw material prices (1600 UAE Time), Argentina’s consumer confidence (1700 UAE Time), as well as South Africa’s interest rate decision (1700 UAE Time) and unemployment rate (2300 UAE Time).
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