Australian shares are tipped to open higher today, following a strong performance on Wall Street in the wake of the Federal Reserve’s forecast for interest rate cuts.
ASX futures were pointing up 0.6% to 7,884 points early this morning.
US sharemarkets gained ground on Wednesday after the Federal Open Market Committee (FOMC) kept the federal funds rate on hold at 4.375%, as had been widely anticipated.
Fed chair Jerome Powell acknowledged that inflation remains elevated, but staked confidence in the strength of the US economy and labour market.
The vote was 11-1, with Governor Christopher Waller dissenting as he supported maintaining the pace of quantitative tightening.
Gains following Fed call
The S&P 500 rose 1.1% to 5,675, with consumer discretionary stocks leading gains after Powell's measured praise of economic conditions.
The Dow Jones climbed 383 points or 0.9%, while the tech-heavy Nasdaq gained 247 points or 1.4%.
Boeing shares surged 6.8% after the company announced that new tariffs were unlikely to have a near-term impact, while Nvidia added 1.8% after CEO Jensen Huang also said tariffs would not significantly affect the company.
Tesla rebounded 4.7% following declines earlier in the week, but Intel lost 6.9% after recent gains tied to the appointment of CEO Lip-Bu Tan.
Westpac analysts noted that while the Fed’s decision was expected, there were some policy shifts.
They highlighted increased economic uncertainty and signalled a slowdown in balance sheet reduction to US$5 billion per month, down from US$25 billion.
Growth projections were revised lower, while inflation forecasts moved higher.
Global markets and commodities
European markets edged higher on Wednesday, supported by a historic policy reform in Germany and movements toward Ukraine ceasefire negotiations.
The FTSEurofirst 300 index gained 0.2%, while the UK FTSE 100 closed slightly higher. Energy stocks led European gains, rising 1.6%.
In bond markets, US Treasury yields eased as the Fed signalled expectations of a 50-basis-point rate reduction this year. The 10-year Treasury yield fell four basis points to 4.24%, while the two-year yield dipped six basis points to 3.98%.
Currencies and commodities
The Australian dollar strengthened, trading at US$0.6350 after reaching a high of US$0.6361. The Japanese yen firmed to JPY148.80 against the US dollar.
Oil prices edged higher, with Brent crude rising US$0.22 or 0.3% to US$70.78 per barrel and US Nymex crude adding US$0.26 or 0.4% to US$67.16 per barrel.
Base metal prices also climbed, with copper gaining 1.7% to a 10-month high on expectations of new US tariffs.
Aluminium rose 0.3%, while iron ore futures slipped 0.3% to US$102.11 per tonne as Chinese demand concerns lingered.
Market outlook
- Australian dollar: -0.7% at 63.57 US cents
- S&P 500: +1.1% to 5,675 points
- Dow Jones: +0.9% to 41,964 points.
- Nasdaq: +1.4% to 17,750 points
- FTSE: Flat at 8,706 points
- EuroStoxx: +0.2% to 555 points
- Spot gold: +0.5% at $US3,057/ounce
- Brent crude: +0.5% to $US70.92/barrel
- Iron ore: -1.7% to $US100.40 a tonne
- Bitcoin: +4.2% to $US85,500
Source: ABC.