Australia: Shares bounce back with all eyes on Fed meeting

AUSTRALIAN shares on Tuesday (Sep 20) recorded their best day in nearly 2 weeks with broad-based gains following a late rally on Wall Street, while focus remained squarely on the upcoming US Federal Reserve meeting.

The S&P/ASX 200 index ended 1.3 per cent to 6,806.4 points. The benchmark fell 0.3 per cent on Monday.

Markets have priced in a 75-basis-point (bps) increase at the end of the 2-day meeting on Wednesday but are worried whether aggressive tightening by the Fed to tame stubbornly high inflation will tip the economy into a recession.

Boosting sentiment back home was the minutes of the Reserve Bank of Australia’s (RBA) September meeting, which revealed that the central bank saw a case for slowing the pace of hikes as policy settings approached more normal levels.

“The market is probably factoring that future rate hikes will be smaller in size as the effect of the 4 back-to-back hikes of 50 bps will be felt with a lag,” said Kunal Sawhney, chief executive, Kalkine Media.

The energy index rose 2 per cent, with gains led by New Hope after the coal miner’s shares hit a record high following a massive jump in its annual profit on soaring thermal coal prices. The mining index rose 2.8 per cent even as China’s strict zero-Covid policy and ailing property sector raised demand concerns. Rio Tinto, BHP Group advanced 2.5 per cent and 3.6 per cent, respectively, while Fortescue fell 0.9 per cent.

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Australia: Shares end lower ahead of central bank meetings

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“Despite a decline in iron ore prices, shares of iron ore miners rallied as easing lockdowns in the city of Chengdu and the government’s efforts to stimulate the property sector in China continues to bode well for iron ore demand,” he added.

The gold and financials indexes advanced 1.4 per cent and 1.3 per cent, respectively, with the Big Four banks gaining between 1.2 and 2 per cent

New Zealand’s benchmark S&P/NZX 50 index rose 0.3 per cent to finish the session at 11,570.43 points. REUTERS