ASX weighed down by miners, energy companies on ahead of Fed decision

Loading

Energy companies (down 1.2 per cent) also faltered despite a 0.1 per cent increase in crude oil prices overnight. Woodside (down 2.1 per cent) and Santos (down 1.9 per cent) both traded lower.

Information technology stocks (down 1.3 per cent) were also on the losing end as Xero (down 2.8 per cent) and TechnologyOne (down 1.1 per cent) weighed on the sector.

The lowdown

Tribeca Investment Partners portfolio manager Jun Bei Liu said Wednesday’s quiet session was characterised by low volume of trading.

“The US set a weak lead for the Australian sharemarket,” Liu said. “Most investors overseas in the US or Asia, kicking are tyres at the moment, so volumes are very low.”

Liu added the market drifted ahead of the Federal Reserve’s interest rate decision and that there was profit taking in the resources space after China posted stronger data.

Meanwhile, she said the consumer sectors had rebounded following a period of profit taking following report season. “Investors are more confident about the Reserve Bank choosing to hold rates,” she said.

Elsewhere, US stocks edged lower, and yields climbed as Wall Street waits for the Federal Reserve’s latest decision on interest rates.

The S&P 500 slipped 0.2 per cent, the Dow Jones dropped 0.3 per cent and the Nasdaq shed 0.2 per cent.

US stocks have been seesawing for weeks on uncertainty about whether the Fed is done with its market-shaking interest rate rises. By pulling its main interest rate to the highest level in more than two decades, the Fed has helped inflation to cool from its peak last year but at the cost of hurting prices for investments and damaging some corners of the economy.

The Fed began its latest meeting on interest rates on Tuesday, with an announcement scheduled for Wednesday. The overwhelming expectation is for the Fed to announce no change to rates. More focus will be on updated projections Fed officials give for where they see rates heading in coming years.

Traders are split on whether the Fed may raise rates again this year, but they’re largely expecting the Fed to begin cutting rates next year. Such cuts can act like steroids for financial markets, giving a lift to all kinds of investments.

Optimists say inflation has come down enough for the Fed to cut rates meaningfully next year, while the economy continues to hum due to a solid job market. Others say the Fed may need to keep rates higher for longer than investors expect to get inflation down to its 2 per cent target, while the threat of a recession still looms.

On Wall Street, shares of Instacart climbed 12.3 per cent in their first day of trading. The company raised $US660 million ($1 billion) in its initial public offering, which priced the stock at $US30 a share.

Loading

On the winning end of Wall Street was US Steel, which rose 3.7 per cent. It said it expected to deliver strong results for the summer, above what analysts were expecting. That’s even with the impact on steel demand expected because of the limited strike by the United Autoworkers against Detroit’s big three automakers.

Ford and General Motors held steadier after falling a day earlier, as the strike against them continues. The leader of the UAW said late on Monday its limited strike could expand unless “serious progress” toward a new labour deal was made by Friday at noon. Ford rose 1.8 per cent, and GM rose 1.9 per cent.

In the bond market, the yield on the 10-year Treasury rose to 4.36 per cent from 4.3 per cent late on Monday. It’s near its highest level since 2007.

The two-year Treasury yield, which moves more on expectations for the Fed, rose to 5.11 per cent from 5.05 per cent.

Yields have been climbing with expectations that rates may stay higher for longer, as well as with crude oil prices.

The price for a barrel of benchmark US crude swung through the day, rising more than 1 per cent at one point before ending the day down 28 cents at $US91.20. It’s climbed roughly 13 per cent this year as oil-producing countries curtail some production in hopes of boosting its price.

Brent crude, the international standard, fell 9¢ to $US94.34 a barrel.

In stock markets abroad, indexes were mixed across Asia and Europe.

Tweet of the day

Quote of the day

“There’s [1700] people whose lives have been affected, together with their families, and I wish to ensure that this matter is resolved as soon as I can,” said Federal Court judge Michael Lee as Qantas was last week found to have outsourced the jobs of ground crew during the pandemic.

You may have missed

The owner of retailer Kathmandu and surf brand Rip Curl has hit $1 billion in sales for the first time, but a warmer Australian winter and surging cost of living pressures have tempered recent demand for outdoor clothing.