Wall St mixed as Fed seen on track for June hike

The Fed under the leadership of new chair Jerome Powell faces a tricky path ahead

The U.S. central bank kept the interest rates unchanged on Wednesday after concluding its two-day monetary policy meeting, in line with market expectations.

And the uptick has jarred financial markets, which fear the Fed will have to raise rates at a faster pace, possibly three more times this year, rather than the two increases previously expected. Analysts expect another hike is coming at the next meeting in June.

Yet the Fed also emphasised the inflation target was "symmetric", suggesting it was not inclined to speed up its tightening plans.

The Fed noted that consumer prices rose 2 percent in March year-over-year.

"Inflation on a 12-month basis is expected to run near the committee's symmetric 2 per cent objective over the medium term", the policy-setting Federal Open Market Committee said in a statement on Wednesday in Washington.

Gold prices moved higher on Thursday, rebounding as the dollar moved lower in the wake of the Fed's statement following their monetary policy meeting. The trade talks carry the potential to negatively impact global stocks as a result of reduced risk appetite, and could also result in reduced purchasing momentum for emerging market currencies. We think this further reinforces the case for rates not be hiked at next week's MPC meeting.

The Fed, under the leadership of new chair Jerome Powell, faces a tricky path ahead as the central bank wants to encourage growth but not trigger a recession. Singapore is not seen as being as sensitive to higher USA interest rates in comparison to its regional peers, which does provide some light behind why the Singapore Dollar is trading somewhat higher against the USD after the FOMC statement. However, the key question is about the number of rate hikes. Therefore, we still expect the Fed to be gradual in its approach and deliver only two more rate hikes this year.

Eurozone inflation for April also came in below market expectations, while in the United Kingdom, a purchasing managers index for services was also below the consensus forecasts.

The latest batch of earnings news is also likely to attract attention, with Avis Budget (CAR), Fitbit (FIT), Kraft Heinz (KHC), MetLife (MET), Tesla (TSLA) and Sprint (S) among the companies releasing their quarterly results after the close today's trading.

The Dow Jones Industrial Average.DJI rose 5.17 points, or 0.02 percent, to 23,930.15, the S&P 500.SPX lost 5.94 points, or 0.23 percent, to 2,629.73 and the Nasdaq Composite.IXIC dropped 12.75 points, or 0.18 percent, to 7,088.15. In the near term, the recent weak economic data readings in Europe could keep the pressure on the Euro and the GBP - with expectations of tighter monetary policy moderating. The Fed's decision to leave its benchmark overnight lending rate in a target range of between one.five percent and one.seven-five-percent was unanimous. In the near term, we believe the positive push on account of the rise inflation and interest rate expectations could help the dollar to some degree.

The South African Rand is showing some indications of recovery against the US Dollar in the aftermath of the latest FOMC statement.

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