Macro Roundup (Jun 16)

SHANGHAI, Jun 16 —This is a roundup of global macroeconomic news last night and what is expected today.

The U.S. dollar lost its gains on Wednesday after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation.

The U.S. Dollar Currency Index, which tracks the greenback against six major currencies, was down 0.77% at $104.71.

The dollar had already been gaining ground in the past few months thanks to the Fed raising rates ahead of most other major central banks and has been given another leg up in recent weeks as investors seek safe havens, fearing the economic impact of rapidly tightening financial conditions.

But with such a large interest rate increase already expected, the dollar may struggle to gain further after the Fed’s decision.

U.S. stock index futures were modestly higher during overnight trading on Wednesday after the Federal Reserve implemented the largest interest rate hike since 1994.

Futures contracts tied to the Dow Jones Industrial Average added 0.22%. S&P 500 futures were up 0.23%, while Nasdaq 100 futures advanced 0.29%.

The major averages ended Wednesday’s session higher, with the Dow and S&P 500 both snapping five-day losing streaks. The 30-stock benchmark added about 304 points, or 1%, while the S&P 500 advanced 1.46%. The tech-heavy Nasdaq Composite was the relative outperformer, rising 2.5%.

Oil prices fell more than $3 on Wednesday as markets worried about a fall in demand after the Federal Reserve hiked interest rate by three-quarters of a percentage point.

Brent crude futures for August settled down $2.7, or 2.2%, at $118.51 a barrel, having fallen as low as $117.75. U.S. West Texas Intermediate crude for July fell $3.62, or 3.04%, to $115.31 a barrel, after dropping to a low of $114.60.

Gold prices pulled back from their highs of the day after the Federal Reserve opted for one of the sharpest U.S. rate hikes since 1994.

U.S. gold futures gained 0.3% to $1,819.

Uncertainty regarding the outcome of Wednesday’s FOMC meeting had prompted some buying interest in safe-haven metals, said Jim Wyckoff, senior analyst at Kitco Metals.

Although gold is considered a hedge against inflation, rate hikes increase the opportunity cost of holding non-yielding bullion.

The pan-European Stoxx 600 provisionally closed up by 1.5%, with travel and leisure stocks adding 3.4% to lead gains as almost all sectors and major bourses entered positive territory.

The strong momentum for regional markets on Wednesday came after several negative trading sessions in Europe, Asia and the U.S.