As expected, U.S. Equity Markets surged yesterday following the 50-basis point hike by the Federal Reserve. The NASDAQ 100 led the gains closing higher by 3.41%, helping the VIX to crash 13%, closing at a price of 25.42. The Federal Open Market Committee (“FOMC”) emphasised that domestic employment and economic activity continue to improve. As a result, the U.S. Federal Reserve said it will move forward with a 0.50% interest-rate hike. The central bank also shifted its Federal-Funds target range from 0.25% to 0.50% to 0.75% to 1.00%. Meanwhile, the Fed will also take steps to shrink the $9 trillion balance sheet, with plans to reduce the number of funds it reinvests when bond holdings mature. Earlier in the day, payroll processor Automatic Data Processing (ADP) said private businesses added 247,000 jobs in April, which was below the estimate of 383,000, and March’s upwardly revised 479,000. This should support the Fed’s decision for its present policy path, as the number indicates employment costs are likely to rise, potentially sending inflation higher. Within the S&P 500, all the 11 sectors finished higher. European Markets closed lower. European Commission President Ursula von der Leyen introduced a proposal for the European Union (“EU”) to ban Russian oil over the next six months and refined fuels by the end of 2022. European Central Bank Executive Board member Isabel Schnabel said it must act to tame inflation, with the first interest-rate hike set for as soon as July. Euro-Zone Retail Sales contracted in March at a rate that was worse than expected due to a slowdown in French and German activity. Germany’s export figures for March were weaker than anticipated thanks to a decrease in shipments within Europe and abroad. In Asia, Beijing’s government requested that residents not leave after shutting down 10% of the city’s subway stations to stem COVID-19 infections in the highest-risk districts. Shanghai health officials said the city will only end lockdowns after it has seen community transmission levels decrease, even as cases ease. The Bank of Korea’s Minutes from its latest policy meeting showed the central bank anticipates additional interest-rate hikes to combat inflation. Equity markets in China and Japan were closed for the holidays. Elsewhere, Oil rose 5.38% on news that the EU will ban Russian energy supplies, while Gold rose 0.5% on the weaker Dollar.
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