Stock Market Extends Gains As Fed Hikes Interest Rates

Shares of Tesla rose 2.8 percent to $262.94 after the electric carmaker said it would raise about $1.15 billion as the company speeds up the launch of its Model 3 sedan.

But the dollar struggled to make more progress through the European morning and waned as NY traders arrived at their desks.

A widely anticipated US interest rate hike combined with a dovish outlook for the future path of rates lifted emerging stocks to 20-month highs on Thursday but also prompted a number of developing central banks to tighten monetary policy.

By contrast, the euro was mostly unruffled by the result of the Dutch election Thursday morning, even after preliminary results backed up the earlier exit polls, showing that Prime Minister Mark Rutte had held off the challenge of far-right rival Geert Wilders.

However, the Fed stuck to its outlook for two more rate hikes this year and three in 2018.

The Dow Jones Industrial Average rose 96.65 points, or 0.46 percent, to 20,934.02, the S&P 500 gained 16.79 points, or 0.71 percent, to 2,382.24 and the Nasdaq Composite added 35.65 points, or 0.61 percent, to 5,892.47. Taiwan's dollar touched a 10-month high, South Korea's won strengthened over 1 percent and commodity currencies such as the rand and rouble rose around 0.5 percent.

Market attention will be squarely focused on Fed Chair Janet Yellen's comments to gauge the future path of interest rates.

"Whether folks agree or disagree with the need to hike, the key here is that the Fed has signaled to markets, and importantly United States and global businesses, that it is in control and the economy is moving as expected", said Greg McKenna, chief market strategist at AxiTrader, in a note.

Holdings of SPDR Gold Trust fell 0.28% to 837.06 tonnes on Thursday from 839.43 tonnes on Wednesday.




OTHERS STAND PAT: Japan's central bank left its benchmark lending rate unchanged and said it would work toward a 2% inflation rate target.

The central bank on Wednesday raised rates by a quarter point to 0.75-1.00 percent, responding to the continued strength in the labor market and a pick up in inflation.

"They are going to be very measured", said Nick Maroutsos, portfolio manager at Janus Capital Group, who believes it is too early to take a view on European interest rates.

"A token rate hike in the late liquidity window is possible, maybe 25 bps or maybe 50 bps, but after having seen the lira performance last night the chances of no change have increased as well", said Nomura's Demir. Meanwhile, Sydney's S&P-ASX 200 rose 0.2%.

The precious metal saw its value push to a two-week high of $1,230 on Friday, driven by a lower US currency following a cautious update by the US Federal Reserve.

Gold, copper and oil all rallied on the weaker dollar. USA light crude settled 11 cents lower at $48.75 a barrel. Brent crude ended the session 7 cents lower at $51.74 a barrel.

It was also roughly flat on the day at $1.0725 per euro and 113.35 yen.

CURRENCIES: The euro from dipped to $1.0746 from $1.0749 late Thursday, and the British pound fell to $1.2367 from $1.2358.

(Copyright © 2015. All Rights Reserved.)
 
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