The Federal Reserve said it would lift interest rates and penciled in a series of further increases this year aimed at stopping the economy from overheating and reducing inflation that is running at its highest levels in four decades. Fed officials said Wednesday they would raise their benchmark federal-funds rate by a quarter percentage point to a range between 0.25% and 0.5% from near zero, and most of them projected pushing it up to at least the level that prevailed before the pandemic hit the U.S. economy two years ago. New projections show most officials expect the fed-funds rate to rise to at least 1.875% by the end of this year, according to the median of 16 officials, to around 2.75% by the end of 2023 and to hold rates there in 2024. That implies a total of seven quarter-percentage-point increases this year and another three or four next year. Inflation rose 6.1% in January from a year earlier, according to the Fed's preferred gauge. Core inflation, which includes food and energy, rose 5.2%. Most officials now see core inflation ending the year at 4.1%, up from their forecast of 2.7% in December. They see interest-rate increases bringing inflation down further, to 2.6% at the end of 2023 and to 2.3% the year after.

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The Swiss stock market resumed its recovery course on Wednesday after a one-day break. The SMI gained 1.9 per cent to 11,901 points. Among the 20 SMI stocks, there were 17 price gainers and three price losers. 58.83 (previously: 46.86) million shares were traded. Banking stocks were among the primary winners in the evening with the upcoming interest rate hike in the USA. UBS and Credit Suisse rose by 6.3 and 5.8 per cent respectively. In the luxury goods sector, Richemont (+10%) and Swatch (+7.9%) climbed significantly with the positive headlines from China. Despite encouraging study results, Roche lost 0.7 per cent as well as the shares of pharmaceutical competitor Novartis (-0.2%). Defensive Swisscom (-1%) was also sold. After an upgrade to "buy" by UBS, Kühne + Nagel increased by 4.1 per cent. Among the other second-line stocks, Von Roll Holding (+2.8%), Adecco (+3.9%) and Kuros Biosciences (+7.7%) had presented business figures.

European stocks recovered on Wednesday, buoyed by a tech-led rebound in Chinese markets and as Ukraine said there was room for compromise in talks with Russia. The Stoxx Europe 600 index rose 3.1% to 448.5 points. In Paris, the CAC 40 and the SBF 120 gained 3.7 and 3.6 percent, respectively. In Frankfurt, the DAX 40 increased by 3.8%, while in London the FTSE 100 climbed 1.6%. The drop in risk aversion led to cheap purchases of stocks that had fallen the most, such as automotive suppliers Valeo (+9.6%) and Faurecia (+8.5%) or Renault (+7.7%). Luxury goods stocks recovered after falling on Tuesday due to fears about Chinese growth. Hermès gained 7.5%, Kering 5.5% and LVMH 6.6%. On the other hand, defence companies, which have risen sharply since the start of the crisis in Ukraine, lost ground. Dassault Aviation dropped 3.1% and Thales lost 1.2%. In Frankfurt, carmaker BMW (+4.1%) said the effects of the war in Ukraine were limiting its production and impacting the current year's outlook, although results should rise significantly thanks to the consolidation of its Chinese joint venture. In Madrid, Spanish fashion group Inditex fell 2.5% after announcing slower revenue growth in the fourth quarter.

U.S. stocks rocketed higher in a volatile session and bond yields jumped to the highest level in almost three years after the Federal Reserve officially said it would raise interest rates for the first time since 2018. Major indexes rallied at the open, pared their gains after the Fed announcement and then raced to finish the session near their highs of the day. The S&P 500 rose 95.41 points, or 2.2%, to 4357.86. The broad stock-market gauge has risen 4.4% over the past two trading days, the biggest two-day percentage gain since April 2020. The tech-focused Nasdaq Composite advanced 487.93 points, or 3.8%, to 13436.55, its best day since November 2020. The Dow Jones Industrial Average rose 518.76 points, or 1.5%, to 34063.10. The prospect of the Fed interest rate increases have roiled markets for months, though investors appeared to take the announcement in stride. The Nasdaq Composite is now on track for its longest bear market since the financial crisis. The S&P 500 is down about 9% from its high. U.S. retail-sales data for February showed increased spending from the month prior as households adapt to the crosscurrents of a strong labor market, falling coronavirus cases and inflation running at the highest annual rate in 40 years. Shares of tech and growth companies, which had been battered in recent months, fared particularly well in trading Wednesday, a move that puzzled some traders. Tech and growth stocks have been the most sensitive to the path of interest rate increases, and some traders said they interpreted Mr. Powell’s stance on monetary policy as more aggressive than they had initially anticipated. Some investors had aggressively dumped these positions since the start of the year while bond yields had risen, potentially setting the sector up for a reversal, some traders said. The S&P 500’s tech sector was one of the best performing, gaining 3.3%. Shares of the ARK Innovation ETF soared $5.65, or 10%, to $60.04. Nvidia shares jumped $15.23, or 6.6%, to $244.96. PayPal added $7.46, or 7.4%, to $107.92. Electric carmaker Tesla (+4.9%) will suspend production in China for a few days due to an increase in coronavirus cases in the country, Reuters reported, citing an internal memo from the group.

In Asia, major indexes continue their recovery on Thursday, supported by positive guidance from Wall Street. China had calmed tempers by pledging support for the domestic economy on Wednesday to ease the impact of the recent Corona pandemic wave in the country. As a result, Chinese stock markets are once again co-leading the region's markets. In Shanghai, the composite index is up 2.2 per cent. In Hong Kong, the Hang Seng Index rises by 5.7 per cent. Once again, technology stocks lead the way; the sector index is up around 8.5 per cent. The Nikkei 225 index (+3.4 per cent) in Tokyo receives additional support from the weaker yen, which mainly benefits export-oriented Japanese companies. The earthquake in the Fukushima region late Wednesday (local time) is not weighing on the index. According to the operator Tokyo Electric Power (Tepco), no damage was initially detected at the ruins of the Fukushima nuclear power plant, which was damaged in a severe seaquake and the resulting tsunami eleven years ago. Tepco's share price rises by 1.4 per cent. Furthermore, Softbank improves by almost 7 per cent.

Treasury yields advanced further on Wednesday from their highest levels in almost three years after the Federal Reserve delivered a quarter percentage point interest rate increase — its first hike since 2018 — and signalled more hikes are on the way. The yield on the benchmark 10-year Treasury note climbed to 2.188%, the highest level since May 2019. The 2-year rate, meanwhile, climbed 8 basis points to 1.938%. The yield on the 10-year German Bund closed at 0.391%, up from 0.336% on Tuesday evening.

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