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The US Federal Reserve cut interest rates for the third time in 2024 by 25 bps, bringing its overnight borrowing rate to 4.25%-4.5%, it said in a press release yesterday. This brings interest rates down a full percentage point this year, after it cut rates by 50 bps in September, and by 25 bps in November.
The Fed is now expected to make two rate cuts next year, according to the closely watched “dot plot,” CNBC reports — half the amount of cuts expected the last time the dot plot was updated in September. The next meeting will take place on 28-29 January.
Still, all options are on the table: The Fed is currently not on “any preset course,” Powell says, and restraint can be “dialed back more slowly” if the economy remains strong, Fed chair Jerome Powell said in a press conference (watch,runtime: 6:53). However, with the current, less restrictive policy stance, coming steps can be more cautious as further adjustments are considered.
Inflation to come in higher than expected: Expectations on inflation remain “well-anchored,” says Powell, with numbers currently still above, but moving steadily toward, the longer term 2% goal. Officials now see inflation coming in at 2.5% by the end of next year, with the 2% target likely out of reach until 2027.
Tariffs? We’ll cross that bridge when we get to it: The effect of Donald Trump’s potential tariffs on the economy is not a present situation to handle, Powell said, according to Reuters, with the proper assessment mainly taking place after the policies are officially issued.
Market reax: US stocks slid after the Federal Reserve’s decision, with the S&P 500 falling 3%, Nasdaq sliding 3.6%, and the Dow Jones declining 2.6%.The USD also hit a two-year high on the news.
MARKETS THIS MORNING-
Asian markets are also in the red following the sell-off on Wall Street, with Japan’s Nikkei down 1.2%, South Korea’s Kospi down 1.7%, and Hong Kong’s Hang Seng falling 0.9%. Wall Street futures are hovering near the flatline.
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ADX |
9,293 |
+0.3% (YTD: -3.0%) |
|
|
DFM |
5,037 |
-0.8% (YTD: +24.0%) |
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Nasdaq Dubai UAE20 |
4,095 |
-0.5% (YTD: +6.6%) |
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USD : AED CBUAE |
Buy 3.67 |
Sell 3.67 |
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|
EIBOR |
4.5% o/n |
4.3% 1 yr |
|
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TASI |
11,961 |
+0.1% (YTD: +0.2%) |
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EGX30 |
30,503 |
-0.3% (YTD: +22.5%) |
|
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S&P 500 |
5,872 |
-3.0% (YTD: +23.1%) |
|
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FTSE 100 |
8,199 |
+0.1% (YTD: +6.0%) |
|
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Euro Stoxx 50 |
4,957 |
+0.3% (YTD: +9.6%) |
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Brent crude |
USD 72.98 |
-0.3% |
|
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Natural gas (Nymex) |
USD 3.37 |
+2.0% |
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Gold |
USD 2,653 |
-0.3% |
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BTC |
USD 100,112 |
-5.0% (YTD: +138%) |
THE CLOSING BELL-
The DFM fell 0.8% yesterday on turnover of AED 947.1 mn. The index is up 24% YTD.
In the green: Sukoon Ins. (+12.7%), Shuaa Capital (+3.5%), and Salik (2.2%)
In the red: Takaful Emarat (-9.9%), Al Mazaya Holding Company (-9.3%) and BHM Capital Financial Services (-8.0%).
Over on the ADX, the index closed up 0.3% on turnover of AED 1.1 bn. Meanwhile, Nasdaq Dubai fell 0.5%.
