Australian shares are easing by 0.1 per cent at lunch, with losses from resource stocks and banks holding equities back most. Despite the moves however, investors continue to be running on the spot with the ASX 200 having one of its more uneventful, directionless weeks of the year in the absence of meaningful catalysts.
Early this morning the Federal Reserve raised interest rates for a third time this year by 0.25 per cent to 2-2.25 per cent as widely expected. After dropping rates to near 0 per cent after the GFC in 2008 to stimulate the economy and help keep borrowing costs low, since 2015 the Fed has been gradually returning rates to more normal levels.
Looking forward, the Fed seems on track to raise rates again in Dec and potentially a couple more times in 2019. Perhaps the main takeaway was a change in wording by the central bank, removing the word “accommodative” when describing its monetary policy stance. This has some market participants perceiving this as a sign it is getting closer to a rate it is happy with. This kept the USD volatile earlier this morning but has now largely returned to yesterday’s levels.
Although there are slightly more winners than losers on the Aussie market today, losses from energy companies, miners, banks and utilities have kept the market under somepressure this morning. The price of oil fell by 1 per cent last night. Outsized gains from Beach Petroleum (BPT) and Santos (STO) are starting to push energy stocks higher however. Fortescue Metals (FMG) is leading the miners lower while the big four banks continue to have an uninspired week, slipping by as much as 0.5 per cent.
The massive week of dividend payments continues, with $3.8bn in company profits being paid out to shareholders today. The lion’s share will be paid from Telstra (TLS), Wesfarmers (WES), Insurance Australia Group (IAG), Sonic Health (SHL), Medibank (MPL) and Santos (STO). On Friday, $4.8bn in dividends will be paid out ($4bn of which will be from CBA).
The Australian dollar hit a high of US$0.7315 just after the Fed raised rates by 0.25 per cent at 4am AEST however quickly fell back to US$0.726 soon after. The Aussie has been hovering around US$0.725 for most of the week.
1.3bn shares have changed hands so far worth $2bn. 495 stocks are up, 438 down and 358 are unchanged.
Published by CommSec