Thursday December 15th

15-12-2016

US stocks set for higher open as Wall Street digests Fed rate hike

U.S. stock index futures pointed to a higher open on Thursday as traders continued to digest the Federal Reserve's decision to raise interest rates. Wednesday saw the Fed raise its short-term target rate by 25 basis points in its second rate hike in a decade. The Fed also surprised markets with a forecast that showed it could raise rates three times next year, instead of two. U.S. stocks fell in choppy trade, with the Dow Jones Industrial average closing down about 120 points. The S&P 500 slipped about 0.8 percent and the Nasdaq composite dipped 0.5 percent. On the data front initial jobless claims, CPI (Consumer Price Index) rose 0.2 percent in November, in line with expectations. Weekly jobless claims, meanwhile, came in at 254,000. The Markit manufacturing PMI is due at 9:45 a.m. ET, with NAHB homebuilder sentiment set to come out at 10:00 a.m. In Europe, the pan-European Stoxx 600 index was around 0.36 percent higher on Thursday morning. On the earnings front Oracle and Adobe Systems are expected to report after the bell. Asian markets were mostly lower on Thursday as the dollar rose sharply and investors digest the Federal Reserve's first interest rate rise this year and its hawkish rate outlook for 2017. In Japan, the Nikkei 225 finished up 0.1 percent or 20.18 points at 19,273.79 after surging more than 0.9 percent earlier. Across the Korean strait, the Kospi ended flat at 2,036.65. Mainland Chinese shares were lower: the Shanghai composite closed down 0.71 percent or 22.2 points at 3,118.32 while the Shenzhen composite closed 0.666 percent or 13.05 points higher at 1,972.9. Hong Kong's Hang Seng tumbled 1.87 percent. The Hong Kong dollar is pegged to the greenback, and a stronger local currency might put pressure on borrowing costs and make exports more expensive. Oil prices were lower on Thursday after sharp falls in the wake of the U.S. interest rate rise, though expectations for a tighter market in 2017 due to planned output cuts led by OPEC and Russia capped losses. The dollar rose to a 14-year high against a basket of other currencies after the U.S. Federal Reserve raised rates for the first time in a year on Wednesday. A stronger dollar, in which oil is traded, tends to hit crude demand as it makes fuel purchases more expensive for users of other currencies. International Brent crude oil futures were trading at $54.20 a barrel at 8:30 a.m. ET (1330 GMT), down 14 cents from their last close. U.S. West Texas Intermediate (WTI) crude oil futures were down 47 cents, or 0.9 percent, at $50.57 per barrel. Gold hit its lowest since early February on Thursday after the Federal Reserve sounded an unexpectedly hawkish note on U.S. interest rates, sparking a surge in Treasury yields and sending the dollar to a 14-year high. Spot gold hit a 10-1/2 month low of $1,132.15 an ounce, and was down 1.2 percent at $1,128.51 an ounce by 8:25 a.m. EDT. U.S. gold futures for February delivery were 2.8 percent, lower at $1,130.60.