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ASX today – The ASX is set for a weaker open on Thursday, with ASX 200 futures pointing to a fall of around 0.7% after the US Federal Reserve raised interest rates and Wall Street turned lower.
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The move threatens to wipe out much of Wednesday’s tentative rebound. The ASX 200 rose 0.3% to 8,695.6 on Wednesday, helped by strength across energy and mining stocks.
Overnight, the Dow Jones fell 1.2%, the S&P 500 lost 0.4% and the Nasdaq finished broadly flat. ASX 200 futures were indicating an open around 8,681.
Rates back in focus
The Fed raised its target interest rate by 25 basis points to 3.75–4.00%, its first increase since July 2023.
The hike itself was largely expected. The bigger issue for markets is the outlook for US rates and bond yields, with inflation still elevated and investors reassessing how far the Fed may need to go.
The US 10-year Treasury yield moved back above 5%, putting renewed pressure on equities and other assets sensitive to higher borrowing costs.
For Australian investors, that could weigh particularly heavily on technology and other higher-growth stocks, while higher global yields provide a tougher backdrop for riskier parts of the market.
Oil provides one offset
There is one important counterpoint to the overnight weakness: oil prices have eased.
Brent crude has fallen back towards US$104 a barrel after recently trading above US$108 as concerns over Middle East supply disruption showed some signs of easing.
Lower oil prices could take some pressure off the inflation outlook, although crude remains well above levels seen before the recent supply shock.
That will be important for the ASX after energy stocks were among Wednesday’s strongest performers.
Woodside and Santos both gained more than 2%, while BHP, Rio Tinto and Fortescue also advanced. A weaker oil price and a more defensive global risk tone could put some of those gains to the test today.
What to watch today
For ASX traders, the key question will be whether the early weakness broadens across the market or whether strength in selected sectors helps limit the decline.
Bond yields, the Australian dollar and commodity prices will be important signals, while yesterday’s strength in miners and energy stocks will be tested.
Gold and other rate-sensitive commodities are also likely to remain in focus following the Fed decision. The Australian dollar was trading around US70.9 cents overnight.
There is little on the domestic economic calendar likely to compete with the global market moves, leaving investors to focus on the ASX open and the reaction across individual sectors and stocks.
After Wednesday’s tentative recovery, Thursday looks set to start on the back foot. The key test will be whether higher US rates and bond yields dominate the session, or whether strength in commodities and selected ASX sectors can provide some support.
Local market news
Novonix (ASX: NVX) and ACP Technologies have agreed to partner on anode materials;
Corazon Mining (ASX: CZN) has kicked of drilling at the Chalice gold project;
Encounter Resources (ASX: ENR) has obtained exceptional niobium intersection at Aileron;
Western Ridge Resources (ASX: WRX) has commenced maiden drilling at Keystone; and
Great Northern Minerals (ASX: GNM) has defined new drill targets at Douglas Creek.
Buck and ore
Now – in forex, the Oz dollar is buying US$0.708
Looking at commodities, all in the greenback,
Iron Ore was steady at $97.41 per tonne in Singapore today,
Brent Crude was down 3.45% to $104.997 per barrel,
Gold was selling at $4260.26,
US natgas futures were down 0.98% to $2.8905 per gigajoule.
That’s HotCopper’s Market Open, I’m Colin Sandell-Hay – happy trading.
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