Stocks rally after Fed hikes rates, crude jumps

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NEW YORK — United Statees (US) stocks rallied and Treasury yields fell on Wednesday (May 4) after the Federal Reserve raised interest rates by 50 basis points as expected and said it would begin to reduce its balance sheet in June in a decision seen as less hawkish than some feared.

The US central bank set its federal funds rate to a range between 0.75 per cent and 1 per cent in a unanimous decision that gave the benchmark overnight rate its biggest bump in 22 years.

"At worst, the Fed wants to meet market expectations. At best, they want to go slower or lower than what the market was pricing," he said. "Although hawkish in its own right, the decision is somewhat dovish compared to the market's lofty expectations," he said. Germany's 10-year government bond traded near multi-year highs, hitting its highest yield since June 2015 at 1.036 per cent, after European Central Bank board member Isabel Schnabel said a rate hike in July was possible.Oil prices rose about 5 per cent as the European Union, the world's largest trading bloc, spelled out plans to phase out imports of Russian oil, offsetting demand worries in top importer China.

Gold bounced higher after Powell flagged risks to the economy from soaring inflation. Earlier, US gold futures settled down 0.1 per cent at US$1,868.8 an ounce.

 

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