FT News Briefing Booming markets neutralise impact of Fed's interest rate rises
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Aug 1, 2023 US stock prices are reaching new heights, making it easier for companies to raise funds despite rising interest rates. Meanwhile, Western oil and gas giants are bracing for scrutiny over their energy transition plans as profits face pressure. China is ramping up overseas investments in metals and mining, reaching record levels this year. Additionally, the private equity owners of Birkenstock are eyeing an $8 billion IPO, highlighting the notable shifts in the investment landscape.
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Market Conditions Neutralize Fed Rate Hikes
- Rising stock prices and falling bond yields neutralize the impact of interest rate hikes.
- This makes it easier for US companies to raise money, counteracting the Fed's efforts to slow the economy.
How Market Conditions Ease Fundraising
- Easier fundraising comes from rising stock prices and falling bond yields.
- This allows companies to raise capital through share sales or by borrowing at lower premiums.
Fed's Actions and Market Reactions
- The Fed's rate hikes aim to slow the economy, but current market conditions are counteracting this effect.
- This suggests investors believe the Fed is done raising rates due to falling inflation.