Markets Update: US Federal Reserve raises US interest rates

In his latest review of the markets performance, Ian Slattery talks about how the US interest rate rise and a weaker euro have boosted equity returns.

Ian Slattery

Stocks took a bit of a breather this week, as the US closed out one of its strongest quarterly performances in a number of years. Concerns about a widening Italian budget deficit impacted on European markets, but the weaker euro currency enhanced returns from US dollar denominated assets.

The Federal Reserve raised US interest rates on Wednesday, in a move that was widely expected by market participants. It also removed the reference to ‘accommodative’ in relation to monetary policy, which signals they are moving to a more neutral level of interest rates.

US consumer confidence remains near an all-time high in September, while WTI oil remained comfortably above the $70 level as OPEC showed little sign of increasing short term supply.

The global index was up 0.7% in euro terms, as a weaker euro helped Irish investors. The US, UK, and Japanese exchanges were the best of the major markets.

Oil was up over the course of the week, and closed at $73/barrel. Gold lost further ground as interest rates moved higher and closed at $1,192 per troy ounce.

The 10 year US bond yield finished at 3.06%, having started the year at 2.41%. The German equivalent also closed higher at 0.47%.

The EUR/USD rate finished the week at 1.16 with the EUR/GBP rate at 0.89.