- Updated
- Business
- Markets
- World markets
ASX treads water, Wall Street steady in countdown to Fed decision
By Sumeyya Ilanbey
Welcome to your five-minute recap of the trading day.
The numbers
The Australian sharemarket ended flat after briefly flirting with an intraday record high in early trade, as investors awaited an overnight decision by the Federal Reserve widely expected to be the first cut to interest rates in the world’s largest economy in more than four years.
Wall Street is expecting a 50 basis point rate cut.Credit: Reuters
The S&P/ASX 200 added just 1.2 points, or 0.01 per cent, to close at 8142.1. Utilities (up 1.3 per cent) and energy (up 0.7 per cent) led gains, while miners and healthcare stocks (both down 0.5 per cent) weighed on the local bourse.
The lifters
Power and gas giant Origin (up 2.2 per cent) pushed up the utilities sector and ended Wednesday’s trading session as the top-performing large-cap stock, followed by TPG Telecom (up 1.7 per cent) and plumbing supplies store Reece (up 1.6 per cent). NAB (up 1.4 per cent) was also among the biggest advancers.
Woodside advanced 0.8 per cent after signing a 10-year contract for the sale of LNG to Japan’s JERA, while BlueScope Steel also added 0.8 per cent on news it signed an agreement to test the production of green iron with Helios Project, based in Israel.
The laggards
Mining stocks slumped 0.5 per cent after the price of iron fell in Shanghai on the first day of trading after the release of underwhelming Chinese economic data. BHP and Rio Tinto were both down 0.9 per cent, while Fortescue fell 0.3 per cent.
Telix Pharmaceuticals (down 3.5 per cent) recorded the sharpest losses among large-caps, followed by sleep treatments giant Resmed (down 3 per cent) and Spark New Zealand (down 2.3 per cent).
The lowdown
All eyes are on the interest rate decision by the Fed, expected to be released on Thursday 4am AEDT. Traders have priced in a 65 per cent chance of a 50 basis point rate cut, while the market has fully priced for a quarter of a percentage point cut.
Capital senior financial market analyst Kyle Rodda said investors’ reaction to the size of the cut would be based on the Fed’s guidance and commentary on the state of the US economy.
“The Fed could cut 25 or 50 basis points and the markets could be okay with either if the Fed offers guidance projections that maintain the total number of existing cuts in the curve,” Rodda said.
“The critical thing is maintaining the 100 basis points of cuts priced in before the end of the year, and the nearly 10 cuts discounted before the end of 2025. For example, a 25 basis point move might prompt knee-jerk fear in the markets. However, if the Fed’s commentary and [statement] make it very clear that a 50 point move is on the cards, if not likely, in either November or December, then a 25 point move at this meeting would be a relatively trivial matter of timing.”
On Wall Street, the S&P 500 edged up by less than 0.1 per cent. It remains 0.6 per cent below its all-time closing high set in July, but briefly rose above that mark during the morning.
The Dow Jones slipped 15.90 points, or less than 0.1 per cent, while the Nasdaq composite edged up by 0.2 per cent.
In the bond market, the 10-year Treasury yield rose to 3.64 per cent from 3.62 per cent late Monday. The two-year yield, which more closely tracks expectations for the Fed’s actions, rose to 3.59 per cent from 3.56 per cent.
Tweet of the day
Quote of the day
“What this report says is that a universal early education system is one where every child gets access to three days a week, or 30 hours a week, of high-quality education and care, and that every parent can afford for their child to get access to that,” Education Minister Jason Clare said after the Productivity Commission released a report on the childcare sector recommending further raising subsidies for families.
“It sets out a road map for how we might be able to achieve that over the next decade or so.”
You may have missed
All teens using Instagram will automatically have strong restrictions applied, with the change expected to roll out over the next 60 days in a push by parent company Meta to protect children by default rather than putting the onus on parents to instigate controls as it faces legislative backlash.
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.