Opening Bell - Morning Commentary
Major stock indexes jumped, and U.S. Treasury yields declined as the Fed delivered the expected rate cut.
The Fed lowered the target range for the federal funds rate by 25 basis points to 3.50–3.75 per cent. While a majority of Fed officials voted for the quarter-point cut, three dissented—the first dissenting votes since September 2019.
Wall Street surged following the decision, with the S&P 500 closing just shy of a new record high as investors priced in a soft-landing scenario and steady earnings growth.
Projections released after the two-day meeting showed the median policymaker expects just one additional quarter-point cut in 2026, unchanged from September's outlook.
Investors remained hopeful about future reductions despite signals that the central bank will likely pause further cuts for now.
Markets interpreted the move as dovish but not the start of an aggressive easing cycle, tempering expectations for risk assets and rate-sensitive sectors.
The Fed announced it will begin purchasing approximately $40 billion worth of short-term Treasury bills per month starting December 12 to maintain ample reserves in the banking system. The move effectively ends quantitative tightening and marks a modest balance-sheet expansion, easing money-market liquidity and reducing the risk of future funding stress.
Silver futures hit a record high, touching $62 per troy ounce.
Most Asia-Pacific markets opened higher on Thursday following the Fed's third rate cut of the year, but failed to sustain those gains.
The Nifty extended its losing streak to three consecutive sessions, declining 81 points to close at 25,758 yesterday, near its intraday low.
On the upside, the 20-DEMA at 25,955 is expected to act as immediate resistance.
Indian markets are likely to open with a flourish on short covering but may face selling pressure at higher levels.