There were some significant developments last week as the US Federal Reserve kept interest rates on hold and projected three rate cuts in 2024.
This is a significant "pivot".
After what was arguably the most-important Fed decision of 2023, Jerome Powell said inflation easing without an unemployment spike is good news, while reiterating that policy has moved well into restrictive territory.
In a move that was applauded by several market observers who referred to it as being "sensible", the Fed chair continued to say officials are proceeding carefully as inflation may have eased, but it's too high.
It is also worth noting that since Powell's speech, several Federal Reserve officials have pushed back on the markets perception that rate cuts will definitely occur next year.
In currency markets, the US dollar (USD) increased but this was mostly driven by the weakness in the Euro rather than the discussion of rate cuts by the Fed.
The Euro has been weakened by Europe's negative GDP growth in the last quarter.
However, the Australian dollar and New Zealand dollar both increased against the USD.
In commodity markets, Brent Crude Oil has been rallying for the past week, with a slight drop over the weekend to $76.55 per barrel.
However, both WTI and Brent Crude Oil picked up due to the suspension of crude shipments through the Suez Canal following attacks to cargo ships in the Red Sea.
In equity markets last week, major US indices both rallied with the S&P500 rising by 2.49 per cent and the tech heavy NASDAQ by 2.85pc.
Asian markets also saw positive returns with the Hang Seng rallying by 2.8pc in what has been a difficult post Covid recovery for the Hong Kong Index.
In other equity news, Pfizer Inc is likely to start the new year trading near the lowest level in a decade. This comes following a disappointing 2024 outlook.
Meanwhile, Costco Wholesale Corp has announced a special dividend of $15 after they beat profit expectations for the last four quarters.
The domestic market also saw one of its best weeks of the year closing on Friday up 3.44pc.
- This article does not take into account the investment objectives, financial situation or particular needs of any particular person. Before acting on any advice contained in this article, you should assess whether it is appropriate in light of your own financial circumstances or contact your financial adviser. Christopher Hindmarsh is an adviser at JBWere Limited. JBWere Limited AFSL 341162.