Fed - what could the announcement mean?

Published on: 03/16/16 02:20:pm

IF Fed doesn’t announce a rise today, equities will surely like it. We could see a kneejerk reaction upwards.

However, even if they do, we needn't be very worried if we are to go by historical rate rise reactions. In the past, more often than not, equities have done well during initial rate rise announcements.

We can demonstrate this further through the three charts below.

This chart shows what markets have done in the past rate hikes: corporate earnings usually increase, so does the stock index.

This doesn't just have an impact in the US, global markets also rise after a quarter, albeit with a little volatility just around the announcement.

Finally we can look at the complete data on previous rate rises and market reactions.

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