Fed officials split over U.S. tax reforms but eye further rate hikes

Sunday, 14 Jan, 2018

Minutes from the last meeting showed that the Fed members seemed to be much more divided on this year's monetary policy than initially perceived.

The benchmark S&P 500 breached the 2,700-mark for the first time yesterday, while the Nasdaq Composite and the Dow Jones Industrial Average also broke records as tech stocks climbed amid indications of strong economic growth in the United States and overseas.

On the economic front, US economic activity in the manufacturing sector expanded in December, the Institute for Supply Management (ISM) said Wednesday.

"I would say there's a little bit of a hawkish tilt in the minutes here", said Charlie Ripley, senior investment strategist at Allianz Investment Management in Minneapolis. "They will let it run hot".

Most participants at the Fed gathering reiterating support for "continuing a gradual approach to raising the target range" for the benchmark policy rate, according to minutes of the Federal Open Market Committee's December 12-13 meeting. The Fed raised the base interest rate by 25 basis points to 1.25-1.5% in December 2017.

Elsewhere, West Texas oil approached $62 a barrel for the first time in three years, surpassing a crucial threshold for spurring new shale drilling.

Wall Street held its gains after the release of minutes from the Fed's policy meeting last month.

Significant strength was also visible among housing stocks, as reflected by the 2.4% gain posted by the Philadelphia Housing Sector Index. European bonds rose after strong investor interest in an Irish debt sale, and the euro retreated for the first time in six days.

The Dow Jones Industrial Average rose 98.67 points, or 0.4 per cent, to 24,922.68, the S&P 500 gained 17.25 points, or 0.64 per cent, to 2,713.06 and the Nasdaq Composite added 58.63 points, or 0.84 per cent, to 7,065.53.

-The Stoxx Europe 600 index climbed 0.5 percent.

-The U.K.'s FTSE 100 index rose 0.3 percent.

-Germany's DAX index rose 0.8 percent.

-The MSCI Asia Pacific index gained 0.2 percent to the highest on record.

Emerging market stocks rose 0.58 percent, and Japan's Nikkei .

Sterling rose to three-month highs against the dollar, with advancing 0.61% to 1.3586 after data showing that the United Kingdom manufacturing sector expanded strongly at the end of a year ago, although at a slower pace than before.

The dollar was pressured lower by the euro, with climbing 0.35% to 1.2048, the highest level since September 8.

-The British pound fell 0.1 percent.

The greenback also rose 0.2 per cent versus the yen to 112.51 yen on Wednesday. S. Treasury 10-year notes last rose 5/32 in price to yield 2.4471 percent, from 2.465 percent late on Tuesday.

USA crude rose 2.34 per cent to US$61.78 per barrel and Brent was last at US$67.89, up 1.98 per cent on the day.

The euro, meanwhile, slid 0.3 per cent to US$1.2016 after hitting a four-month high of US$1.2081 on Tuesday, up roughly 3 per cent from a mid-December trough.