The Fed plans to keep lifting US interest rates, confirming what many on Wall Street already suspected. (Reuters: Brendan McDermid)
Wall Street investors experienced yet another day of volatile trade — with the main indices zig-zagging in and out of negative territory throughout the day.
Markets at 7:30am (AEDT):
- ASX SPI 200 +0.5pc at 5,886, ASX 200 (Wednesday’s close) +1.2pc at 5,939
- AUD: 71.08 US cents, 54.21 British pence, 61.82 Euro cents, 80.08 Japanese yen, $NZ1.09
- US: Dow Jones -0.4pc at 25,707, S&P 500 flat at 2,809, Nasdaq flat at 7,643
- Europe: FTSE -0.1pc at 7,055, DAX -0.5pc at 11,715, CAC -0.5pc at 5,145, Euro Stoxx 50 -0.4pc at 3,243
- Commodities: Brent crude -1.3pc at $US80.36/barrel, spot gold -0.1pc $US1,222.43/ounce, iron ore +2.6pc at $US73.86/tonne.
This was after the Federal Reserve signalled its plans to keep raising interest rates for America, according to the latest minutes it released overnight.
In defiance of sharp criticism from US President Donald Trump, Fed policymakers unanimously agreed to lift rates last month.
The Fed also said further gradual increases would be consistent with the economic expansion, labour market strength, and firm inflation.
The biggest winner overnight was the S&P financial sector (+0.9pc) — shares in the large banks Morgan Stanley (+2.7pc), Goldman Sachs (+3pc) and Bank of America (+1.3pc) made strong gains, particularly as they stand to profit the most from higher borrowing costs.
The Dow Jones index fell 92 points (or 0.4pc) to 25,707, which is a substantial turnaround considering it fell by more than 300 points earlier in the session.
The S&P 500 and Nasdaq indices closed slightly below their breakeven points, practically flat — at 2,809 and 7,653 points respectively.
The benchmark S&P index has only partially recovered ground lost last week, when it marked its biggest decline since March as investors worried about rate hikes.
The prospect of a more hawkish Fed was exacerbating equity investor fears of uncertainties, ranging from the US-China trade war and weakness in the housing market to the outlook for earnings, said Brad McMillan, chief investment officer for Commonwealth Financial Network.
“The market doesn’t really know what to think at this point. That’s why we’re seeing these swings,” he said.
“With interest rates higher there’s a lot less cushion to smooth away those uncertainties.”
ASX to tumble ahead of job figures
The local share market is headed for a modest fall when it opens this morning.
ASX futures are down 13 points, following weak overnight leads from US and European markets.
In local economic news, the latest job figures from the Bureau of Statistics will be released today.
Reuters-polled economists are expecting the unemployment rate to remain steady at 5.3 per cent, and 15,000 new jobs to have been created in September.
The Australian dollar has slipped to 71.1 US cents, erasing its gains from yesterday.
It was steady at 54.2 British pence and 61.8 euro cents.
“Today the focus will be on the employment data, which is volatile and can have a short term impact on the currency,” said ANZ senior economist Jo Masters.
“Our bias continues to favour trading the Australian dollar with a cautious tone given simmering global risks.”