Key facts
- The Federal Reserve raised interest rates by a quarter point, signaling one more hike this year.
- The U.S. dollar hit a seven-week high against major peers.
- Two-year Treasury yields spiked to their highest since July 2024.
- Brent crude futures slipped 0.7% to $105.05 a barrel.
- Gold rose 1% to $4,305 an ounce.
Global stocks edged higher on Thursday as the Federal Reserve delivered its first interest rate hike in over three years, signaling a hawkish stance that calmed a global bond selloff. The U.S. dollar surged to a seven-week high against its major peers, supported by a jump in short-term Treasury yields as markets priced in further potential rate increases.
In Asia, MSCI's broadest index of shares outside Japan rose 0.4%, while Japan's Nikkei gained 0.5%. Chinese blue-chips slipped 0.4% and Hong Kong's Hang Seng fell 0.9%. Nasdaq and S&P 500 futures bounced 0.5% and 0.6% respectively, following small declines on Wall Street.
The Fed's unanimous decision to raise rates by a quarter point was accompanied by signals of at least one more hike this year. Goldman Sachs analysts noted that an October hike is the most likely scenario to support a timely return to the 2% inflation target, though additional hikes are possible but not their base case. Futures imply a 50% chance of a second hike as soon as next month, with a total of three rate rises priced into the current tightening cycle.
The Treasury yield curve bear flattened, with short-term yields rising while long-term bonds saw some relief. Two-year Treasury yields reached their highest level since July 2024, while the 10-year yield hovered near 5% and 30-year yields eased from a 19-year high.
Commodity markets faced headwinds, with Brent crude futures slipping 0.7% to $105.05 a barrel amid reports of Saudi Arabia offering crude cargoes, easing concerns about Middle East supply disruptions. Gold, however, showed resilience, rising 1% to $4,305 an ounce after an overnight fall.