-Ding dong, the ZIRP is dead: Markets around the world have reacted very positively to the U.S. Federal Reserve’s expertly-managed rate rise. The word of the day is «gradual» as the question quickly moved on from «when?» to «how fast?» the Fed would be raising rates. The famous dot-plot is pointing to four 0.25 percent rate rises in 2016, while the derivatives market is only pricing in a total increase of 0.5 percent next year.
-Divergence: One of the things that is now certain is that global central banks are diverging. This morning the spread between German and U.S. two-year yields is almost the highest since 2006 as the European Central Bank maintains its easing bias while the Fed tightens. In Taiwan, the central bank took things a step further by cutting rates by 0.125 percent at its scheduled meeting. The Norwegian central bank kept rates unchanged this morning, but did signal a possible cut to 0.5 percent in the first half of 2016.
-Argentina drops currency peg: Argentina’s new president, Mauricio Macri has wasted no time in fulfilling one of his campaign pledges as his administration announces the lifting of currency controls from this morning. Finance Minister Alfonso Prat-Gay indicated he anticipates the peso could plunge by about 30 percent when markets open in Buenos Aires.
-Putin on Russia: In his annual televised press conference, President Vladimir Putin said that Russia has passed the peak of the economic crisis which hit the country in the aftermath of the collapse in oil prices. In the marathon press conference, that was still in progress at 11:15 a.m. London time, Putin also damped hopes of a fast resolution to the stand-off with Turkey over the downing of a Russian plane on Nov. 24.
-Yuan: One currency that is worth watching is the Chinese yuan, which weakened again overnight, for a record 10th day. Expectations are mounting that weakening the yuan will continue to be policy well into 2016, which increases risks in the wider Asian currency market as higher volatility in the Chinese currency could increase volatility across the region.
-Momentum from the Fed: U.S. stock markets surged Wednesday, and global markets are following Thursday, after the Federal Reserve announced its first interest rate hike in nearly a decade. Fed chair Janet Yellen said she feels «confident about the fundamentals driving the U.S. economy.» And that helped give investors confidence to drive global stock markets higher. All key European markets are rising in early trading, with the main German and Spanish indexes jumping by as much as 3%. Middle Eastern indexes are also popping up, with Saudi Arabia’s All-Share index advancing by about 2%. Asian stock markets jumped at the open and closed the day in positive territory. China’s benchmark Shanghai Composite gained 1.8%, while Japan’s Nikkei rose 1.6%. Stocks in Australia were up 1.4% and Hong Kong’s Hang Seng index added 0.8%. U.S. stock futures are looking solid Thursday. The U.S. dollar is also holding steady after surging on Wednesday in the hours following the rate rise. The euro and Swiss franc are edging lower.
-Stock market movers — Pandora, FedEx, UPS: Shares in Pandora Media (P) are jumping by about 20% premarket after the Internet radio service received a favorable ruling on the royalties it’s required to pay record labels. The U.S. Copyright Royalty Board said Pandora must pay 17 cents per 100 streams between 2016 and 2020. The rate is 15% higher than Pandora is currently paying, and more than it had proposed. But it is much lower than the 25 to 29 cents requested by rights holders. Shares in FedEx (FDX) are jumping premarket after the firm delivered a better-than-expected earnings report. And competitor UPS (UPS) is also seeing a premarket boost.
-Economics: The U.S. Department of Labor is releasing data on weekly jobless claims at 8:30 am ET. Unemployment claims are around their lowest level in 15 years. Investors are also going to be watching as the heads of 28 European Union countries hold a meeting to discuss border controls and reforms Britain wants if it is to remain a member of the EU.
-Wednesday market recap: As you already know, the markets partied yesterday. The Dow Jones industrial average grew 1.3%, while the S&P 500 and Nasdaq rallied 1.5%.