Following another volatile trading session U.S. Equity Markets reversed earlier losses to close higher led by the 2.5% gain in the NASDAQ 100. This move higher saw the VIX close lower by over 9% at a price of 29.62. The U.S. Federal Reserve approved its biggest interest-rate hike since 1994 and suggested it would continue to take aggressive action to slow the economy and combat inflation. During their two-day policy meeting, central bank officials agreed to raise rates by 0.75%, bringing the total benchmark Federal-Funds rate to around 1.5% to 1.75%. This increase was greater than what many had anticipated, as several rate-setting Federal Open Market Committee members noted rates would rise by 0.50%. Still, Fed Chairman Jerome Powell said he does not anticipate hikes of this magnitude to be “common.” However, he added that the July meeting could see an increase between 0.50% and 0.75%. This could suggest that while the central bank had previously taken a more gradual approach, the economic situation and rising inflation may be becoming a greater concern, as much of the released data shows prices are not cooling despite the Fed’s actions. Within the S&P 500, 10 of the 11 sectors finished higher. European Markets closed higher. European Central Bank Executive Board member Isabel Schnabel said the bank will continue to work toward policy normalisation while tackling any potential disorderly bond market moves. French final Consumer Price Index growth for May was in line with the preliminary reading, as rising energy prices continued to head higher. Euro-Zone Industrial Production growth for April was in line with expectations, rebounding compared with March, as German output expanded once more. The ECB called an Emergency Meeting yesterday morning which concluded three hours later with news that was short on detail. However, Bond Yields across the Euro-Zone fell as the ECB hopes this will be the start of a trend. The Governing Council announced that it will reinvest redemptions under the Euro 1.7 trillion Pandemic Purchase Programme in a flexible way. Whether this is enough to stem the Bond rout only time will tell. In Asia, Chinese Retail Sales numbers for May contracted less than expected, as spending in restaurants and on consumer goods recovered. Japanese Core Machinery Orders for May were stronger than anticipated, hitting their highest level since 2006, as companies were increasingly optimistic about an economic rebound. The People’s Bank of China left its one-year medium-term lending facility unchanged to stem any Yuan fallout from the Federal Reserve’s pending rate hike. Japanese Chief Cabinet Secretary Hirokazu Matsuno said the government will step in to take necessary action against persistent yen weakness if necessary. Elsewhere, Oil fell 2.44% on reports that China and India are importing large amounts of Russian crude, while Gold gained 1.2% on Dollar weakness.
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