Fed done with hikes

The Federal Reserve

Unsurprisingly, the Federal Reserve kept the target for that rate unchanged at 5.25%–5.5%. But the markets now have the green light to believe that there may be cuts in rates in 2024. Certainly, that's the case in the US, where Fed Chair Jerome Powell signalled that the bank could start cutting interest rates next year if inflation continues to fall.

US indices

Powell's comments rippled through all asset classes; US indices rallied, with the Dow Jones industrial average closing at an all-time high. On the currency market, the USD unsurprisingly dropped. The dollar basket hit a four-month low. Copper, zinc, and aluminium rose in excess of 1% overnight, and gold is back above $2,000.

Oil

Oil prices also rose during Asian trade. Like base metals, WTI and Brent benefited from the Fed signals on lower borrowing costs in 2024. Earlier, a larger-than-expected drop in crude stockpiles also supported prices. The Emergency liquidity assistance (ElA) reported a 4.3 million-dollar decline in crude oil stocks last week. Gasoline and distillate inventories increased.

Bank of England

In the UK, the Bank of England (BOE) board members are widely expected to keep the policy rate unchanged at 5.25%. But will the MPC stick to its "higher for longer" approach? This was, until recently, what many believed, considering the persistently high inflation in the UK. But now it all seems a bit more uncertain after recent growth data. Britain's economy unexpectedly shrank by 0.3% in October.

European Central Bank

45 minutes after the European Central Bank (ECB) decision, the ECB will deliver its own rates for the eurozone. A drop in consumer inflation to 2.4% has raised hopes for an earlier rate cut. No change is expected today. The main refinancing rate is forecast to remain at 4.5%, the facility rate is expected to stay at 4%, and the marginal lending rate is to remain at 4.75%. Up until recently, ECB officials have been consistently stressing not considering a rate cut before the second half of 2024.But change is in the air. Isabel Schnabel, in charge of market operations, said she didn't rule out a rate cut in the first half of 2024.

New Zealand's economy

New Zealand's economy unexpectedly contracted in the third quarter. Gross domestic product fell 0.3% in the September quarter, well below analysts' forecasts of a 0.2% rise. Annual gross domestic product (GDP) decreased by 0.6%, Statistics New Zealand data showed, whereas the market had expected an increase of 0.5%. Downward revisions were made to economic growth in the previous quarter. Second-quarter growth was revised to 0.5%, down from the 0.9% reported initially. Following the release of the data, the market priced out any chance of another hike from the Reserve Bank of New Zealand and flagged a near-certain rate cut by July.

Australia's employment

Australia's employment far outpaced expectations for a second month in November, yet the jobless rate rose to a 1-1/2 year high as more people went looking for work, adding to signs of loosening in the labour market. The jobless rate rose to 3.9%, the highest reading since May last year, as the participation rate climbed to a record high of 67.2%. Net employment jumped by 61,500 in November from October. Market forecasts had been for an increase of around 11,000.

Currys

Elsewhere on the equity market, Currys sticks to its annual guidance after reporting a first-half loss in line with last year. The British electrical retailer posts an adjusted loss before tax of £16 million. Group revenue fell 4% to $4.16 billion.

Adobe

Adobe shares dropped more than 6% in extended trading on Wednesday after the software maker posted a lighter-than-expected forecast for 2024. Earnings came in at $4.27 per share. Revenue rose 12% to $5.05Billion. While results for the latest quarters topped estimates, Adobe's guidance for the new fiscal year disappointed Wall Street.