Local shares are poised to open lower as the Federal Reserve confirmed its positive outlook for the US economy.
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What you need2know:
• SPI futures down 11 pts at 5418
• AUD at 87.95 US cents, 95.70 Japanese yen, 69.58 Euro cents and 54.92 Euro cents
• S&P 500 -0.1%, Dow -0.2%, Nasdaq -0.3%
• In Europe, Euro Stoxx 50 -0.5%, FTSE +0.8%, CAC flat, DAX +0.2%
• Spot gold drops 1.2% to $US1213.32 an ounce
• Brent oil up 1.2% to $US87.07 per barrel
• Iron ore slips 0.2% to $US79.09 per metric tonne
What’s on today
National Australia Bank reports its full-year profit, Australia new home sales, export and import prices, national accounts; US economic growth.
National Australia Bank profit report.
Commonwealth Bank of Australia is set to launch a $1 billion “tier two” subordinated bond to institutional investors, in a deal expected to price at about 1.9 per cent over the bank bill swap rate.
Morningstar raised Metcash to “hold” from “reduce” after it moved through a price trigger and has a $2.50 a share fair value call on the grocery wholesaler.
Josh Kannourakis, analyst at Baillieu Holst, has moved to a “hold “ on Vita Group and a price target of $1.15 a share after the electronics and telecommunications retailer released a plan to pay special dividends over coming years.
Currencies
The greenback surged higher after the Federal Reserve signaled confidence the US economic recovery remained on track while investors started to bet on an interest rate increase sooner than previously expected.
"The dollar-positive move you are seeing right now is relative to where the market was. This came in as a more optimistic and more hawkish statement in the fact that it didn't discuss greater risks to the US overall. It didn't seem to imply there was any real delay from what the Fed has communicated before," said Richard Cochinos, head of Americas G10 FX strategy at Citi in New York.
"The market pricing was for October of 2015 for the first Fed hike. FOMC language, and Fed present language has been for June 2015. So the market is now going to be taking some of its certainty off October and placing it more back towards June and that is ultimately going to be a dollar-positive currency move," he said.
Commodities
Pierre Andurand, one of the most respected and successful fund managers in the oil industry, said he believed US light crude oil could fall as low as $US50 per barrel. The US benchmark oil price, also known as WTI, “will be volatile, but assuming no more supply disruptions, I think we can overshoot down to $US50 a barrel".
Nickel hit two-week highs on concern about declining ore stocks in China but later pared gains as rising inventories showed metal was still available. Supply is still ample, highlighted by a surge in LME nickel stocks by about a third since mid-June. Stocks rose on Wednesday to a record 380,946 tonnes, more than 10 weeks of supply.
Gold prices fell more than 1 per cent, extending earlier losses as jittery bullion investors offloaded bullish bets after the Federal Reserve gave an upbeat outlook for jobs growth as it ended its years-long bond buying stimulus program.
US stocks are lower in the wake of the Fed's policy statement.
The Federal Reserve ended its monthly bond purchase program and signalled confidence the US economic recovery would remain on track despite signs of a slowdown in many parts of the global economy.
"The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability," the central bank's policy committee said in a statement following a two-day meeting.
It retained its basic language regarding interest rates from recent statements, saying that rates would remain low for a "considerable time" following the end of the bond purchases this month.
Europe
Southern European shares lagged small gains in pan-European indexes on Wednesday as weak results from heavyweight bank BBVA offset optimism ahead of a Federal Reserve’s policy announcement.
Spanish bank BBVA fell 4.1 per cent as it reported a lower-than-expected net profit for the first nine months of the year and the pace of an ongoing turnaround at the lender disappointed analysts and investors. The stock was the biggest drag on Euro STOXX banking index, which fell 3.1 per. cent.
Fiat Chrysler Automobiles (FCA) outperformed a lacklustre Milan bourse, surging 12.8 per cent as it unveiled plans to list a 10 per cent stake in luxury brand Ferrari and issue $US2.5 billion in convertible bonds to help fund the parent company’s turnaround plan.
What happened yesterday
Weakness among the big banks cruelled an early resources-led bounce, with the Australian sharemarket closing marginally lower on Wednesday.
The benchmark S&P/ASX 200 eased five points to 5447.7, while the broader All Ordinaries slipped three points to 5431.1.