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The Australian share market opened lower after a negative session on Wall Street following the ninth consecutive interest rates hike.
The S&P/ASX200 opened 0.7 per cent lower at 6964 points.
Wall Street
All 11 US sectors fell after the Federal Reserve raised benchmark rates by 25 basis points and hinted at a pause after one more hike.
An initial rally was quashed after Chairman Jerome Powell said a rate cut this year was unlikely, and Treasury Secretary Janet Yellen said there were no government plans to guarantee bank deposits above US$250,000, suggesting the banking unrest will be around for the foreseeable future.
Another raise was broadly expected, but the increase has been described as “dovish” by some economists, meaning not very aggressive.
Rates were expected to rise half a percentage point, but that was before the recent banking crisis.
“Wall Street’s initial take on the Fed was that they delivered a dovish hike and that banking turmoil will finish the job of bringing inflation back to target,” Senior Market Analyst Edward Moya of The Americas OANDA said.
Foreign Markets
All US indexes were down, with the Nasdaq reversing a 1.3 per cent gain to close 1.6 per cent lower at 11,669 points. The Dow Jones closed 1.63 per cent lower at 32,030.11 points.
Meanwhile, the FTSE ended Wednesday in the green at 7566 points.
Commodities
Iron ore prices were hit by reports of Chinese plans to reduce steel production by 2.6 per cent this year.
Gold rallied after the Fed announcement. As Mr Moya put it, Wall Street having to deal with further banking turmoil should keep safe-haven flows coming to gold.
“Gold’s on a mission to recapture the US$2000 level, and shortly after that, a possible run to record territory,” he said.
Crude oil prices are on the up, with oil exports surging to a record high, easing global growth slowdown concerns.
