For risky markets, this FED meeting on July 26 and 27 was expected to be the highlight of the week. By announcing a 75 basis point rate hike, the FED has rekindled the flame in the crypto market. But also on the stock market. Beyond the figures, it is above all his philosophy that reassures.
The Federal Reserve announces a new hike of 75 basis points!
Between fears and hopes, the meeting of the FOMC (Federal Open Market Committee) was bound to mark the markets this week. And it did not fail. By announcing a rate hike of 75 basis points, the level expected by the markets, the body triggered a tsunami of buying on the equity market, but also on digital assets.
Because beyond the figures, it is above all the posture of the American central bank that has reassured. Indeed, Jerome Powell, the chairman of the body specified that the lack of long-term visibility on the American economy left no other choice but to establish a guideline “meeting by meeting”.
According to Peter Tuz, president of Chase Investment Counsel Corporation, the markets welcome the Fed's willingness to let the market guide its monetary policy.
Between the months of June and July, the FED, therefore, raised its key rates by 150 basis points, a first since the 1980s. It must be said that inflation is dangerously approaching the 10% threshold.
The latest figures released for June showed inflation at 9.1% over a rolling 12-month period. If the Fed is fighting against the rise in the general price level, it will also have to be careful not to let the American economy fall into recession. The room for maneuver now seems fairly limited.
The crypto market is growing strongly!
Following the FED announcements, the crypto market reacted strongly. Below $21,500 before the conclusion of the monetary policy meeting, Bitcoin soared to the $23,000 threshold. As shown in the graph below which shows the price of the mother of cryptocurrencies over the last 24 hours:
As of this writing, Bitcoin is flirting with the $23,000 threshold, above its 200-week moving average ($22,800). More than the FED's monetary policy announcement, the market is mainly expecting a weekly close of BTC above this moving average. It is at this price that the market could reverse the trend for longer.
For its part, Ethereum flirted with the $1,700 mark, reaching levels more touched for more than a month. All altcoins also followed suit. Over the past 24 hours, Polkadot is up 12%.
The Solana, Cardano, and Binance Coin projects are showing increases of between 5 and 8%. Of the top 100 largest crypto marketcaps, none have posted losses over the past 24 hours. Overall, the market grew by 7.20%
The US equity markets are celebrating!
The US central bank's announcements also had an effect on the equity market. In addition to raising rates by 75 basis points, the chairman of the FED seemed to have been able to reassure investors. In yesterday's session, the Dow Jones index recovered 1.37 points to close to 32,200 points.
The S&P 500 posted an increase of 2.62% over the session, bringing it above 4,000 points. Finally, the Nasdaq Composite index posted an increase of 469 points to close up 4.06%.
This increase allows the Nasdaq to record its strongest daily increase since April 2020. For its part, the S&P 500 reached a level not reached since June 8.
While the Fed's announcement had a considerable impact on the markets, the American stock markets were also boosted by the publication of the results of Microsoft and Alphabet.
Elsewhere in the world, the announcement does not seem to have direct effects. At the opening of the day's session, the CAC 40 showed a timid increase of 0.16%. Same observation for the FTSE 100 which shows a decline of 0.24% at the time of writing these lines.
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