By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Wall Street finished in a sea of red after the Fed announced its first quarter-point interest rate cut in a decade long of economic expansion. The FOMC did not commit in a lengthy rate cut cycle which caused major US equity indices to retreat from last week record highs:

“As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 per cent objective.” 

 

In the press conference, Chair Powell said that the central bank’s rate cut was a “mid-cycle adjustment to policy” rather than “the beginning of a long series of rate cuts.”A less-dovish Fed sent the US sharemarkets deep into negative territory.

• The Dow Jones Average Industrials and Nasdaq Composite lost 1.2% to finish at 26,864.27 and 8,175.42 respectively.

• S&P500 ended 1.1% lower at 2,980.38.

Apple reported its third-quarter results on Tuesday after the closing bell. The Company beats revenue, and its share price rose by 2.04%.  Despite a fall in revenue in its flagship product, its wearables and services products made up for the drop in iPhone revenue. It also surged near the trillion-dollar status again.

Source: Bloomberg Terminal

Currency Markets

The price action in the currency markets was all about the US dollar, which gathered strength against nearly all the G10 currencies on Chair Powell’s comments. With no firm commitment to an easing cycle, and a strong ADP employment report showing that the labour market remains the brightest spot of the American economy, the greenback bolstered higher.

Source: Bloomberg Terminal

The revival of the Aussie dollar on the back of upbeat CPI figures was shortlived. The Aussie dollar dropped to 68.50 US cents weighed by a stronger greenback. Aussie New Home Sales and Caixin Manufacturing PMI will be the next important events for the pair.

AUDUSD (Hourly Chart)

Source: GO MT4

Commodities

A decreased by 8.5 million barrels in crude oil inventories initially boosted oil prices. However, WTI and Brent Crude retreated on a stronger US dollar despite

UKOUSD and USOUSD (Daily Chart)

Source: GO MT4

It was a choppy trading session for the yellow metal after the Fed delivered a hawkish cut. The XAUUSD pair moved from a hight of $1,34 to a low of $1,410.

As of writing, it is currently trading at $1,411.75. On the daily chart, we can see that the price of Gold remained in the $1,400 region and did not drop below that key level.

 

Source: GO MT4

Cryptocurrencies

Unlike the stock market, Bitcoin pushed above the $10,000 mark. Crypto-market was mostly trading in the green yesterday. Could the Fed have been behind the rally as afterall, every market moved with the Fed yesterday?

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