Financial markets have survived the latest fed meeting, with growing expectations of a rate rise at the two day meeting of the US central Bank in September.
Wall Street ended higher for a second session in a row, as did most European markets, while US oil and gold futures prices, copper rose, but the Aussie dollar slipped back.
Investors also took heart at the late rise in Chinese markets which seems to have been engineered by government buying of shares, especially the shares of major companies.
As a result our market is looking at a solid 30 plus point start, according to the overnight share futures contract.
The S&P 500 ended up 15.32 points, or 0.7%, to 2,108.57, the Dow rose 121.12 points, or 0.7%, to 17,751.39, and the tech-heavy Nasdaq Composite was up 22.53 points, or 0.4%, at 5,111.73.
Helping sentiment in our markets this morning will be the surprise 4.6% jump in spot iron ore prices in China to $US55.89 a tonne, according to Metal Bulletin Ltd.
That was the biggest increase since July 9. The price is now up 25% from the lows in early June, but are still 22% down so far in 2015.
The tone of the post-meeting statement from the Fed helped late trading in the markets.
The central bank said the US economy and job market continue to strengthen, confirming the rising chances of a rate rise at its September meeting on the 16th and 17th of that month.
From the wording of the statement all it will take for a rate rise to be certain will be two solid jobs reports for the US for July (next week) and August (in a month’s time).
The Fed statement said the bank felt the economy had overcome the first-quarter slowdown and was “expanding moderately” despite a downturn in the energy sector and headwinds from overseas. The central bank in particular noted “solid job gains" in recent months.
“On balance, a range of labor market indicators suggest that underutilization of labor resources has diminished since early this year,” the Fed said in the post meeting policy statement that kept rates unchanged.
That is an upgrade in its view of labour conditions since its June meeting, when it said labor slack had “diminished somewhat."
The Fed said it wanted to see “some further improvement in the labor market," and gain more confidence that low inflation will rise to its 2% medium-term target.
The statement also retained language saying that risks to growth were “nearly balanced,” suggesting the Fed has concerns about a new economic downturn rather than rising inflation.
If the Fed does lift rates in September, it will be the first rate increase since 2006.
