Macro Roundup (Sep 22)

SHANGHAI, Sep 22 —This is a roundup of global macroeconomic news last night and what is expected today.

The dollar surged to a fresh two-decade high on Wednesday after the Federal Reserve raised interest rates by another 75 basis points, as expected, and signaled more large increases at its upcoming meetings.

The Fed’s new projections showed its policy rate rising to 4.4% by the end of the year, before peaking at 4.6% in 2023 to curb uncomfortably high inflation. Rate cuts are not expected until 2024.

The dollar index hit a fresh 20-year high of 111.63 and was last up 0.9%% at 111.25, in its fourth positive session in five.

U.S. stock futures fell on Wednesday night following a volatile session in the major averages as traders weighed another large rate hike from the Federal Reserve.

Dow Jones Industrial Average futures declined by 124 points, or 0.41%. S&P 500 and Nasdaq 100 futures fell 0.6% and 0.76%, respectively.

During the regular session on Wednesday, the Dow Jones Industrial Average slid 522 points, or 1.70%, despite jumping more than 300 points earlier in the day. The S&P 500 shed 1.71%, and the Nasdaq Composite slumped 1.79%.

The Federal Reserve passed through a third consecutive 0.75 percentage point increase. Policymakers pledged to continue raising rates as high as 4.6% in 2023 before pulling back in the fight against inflation, spurring fears on Wall Street that the economy could tip into a recession.

The central bank expects to raise its year-end rate to 4.4% in 2022, continuing aggressive action against rising prices through the remainder of the year.

Oil prices fell about 1% to a near two-week low in volatile trade on Wednesday after the U.S Federal Reserve delivered another hefty rate hike to quell inflation that could reduce economic activity and demand for oil.

The Fed raised its target interest rate by 75 basis points for the third time to a 3.00-3.25% range and signalled more large increases to come. Risk assets like stocks and oil fell on the news, while the dollar rallied.

Brent crude futures settled 79 cents, or 0.9%, lower at $89.83 a barrel, its lowest close since Sept. 8, while U.S. West Texas Intermediate (WTI) crude fell $1.00, or 1.2%, to $82.94, its lowest close since Sept. 7.

Gold reversed losses after Federal Reserve Chair Jerome Powell explained the central bank’s reasoning for hiking interest rates on Wednesday.

Spot gold initially fell after the Fed increased interest rates by 75 basis points for the third time in a row. The central bank also indicated it will continue hiking above the current level.

Spot gold was last up 0.6% at 1,673.69 per ounce and U.S. gold futures rose 0.66% to 1,682.2.

The pan-European Stoxx 600 provisionally ended the day up 0.9%, having recouped opening losses of around 0.4%.