Australia: Shares end lower as Fed minutes signal near-term rate hikes
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AUSTRALIAN shares closed lower on Thursday (May 26), led by mining stocks, as the mood in Asian markets was subdued after minutes from the Federal Reserve meeting hinted that the US central bank would stick to rate hikes in coming months.
The S&P/ASX 200 index ended 0.7 per cent lower at 7,105.90. The benchmark closed 0.4 per cent higher on Wednesday.
Despite the sombre mood, technology stocks took positive cues from Wall Street’s strong finish and gained 1 per cent.
Software maker Appen jumped 29.2 per cent to top the benchmark index after receiving a A$1.2 billion (S$1.17 billion) buyout approach from Canada’s Telus International.
Leading losses, Australian mining stocks snapped their 4-day winning streak and dropped 1.1 per cent after iron ore futures slumped on slowdown fears for China’s economy.
Sector majors BHP Group and Rio Tinto fell 0.9 per cent and 1.1 per cent, respectively.
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“We have held up pretty well through all the US volatility and think there is some profit-taking in resources today,” said Henry Jennings, senior analyst, Marcustoday Financial Newsletter.
Financial stocks fell 0.4 per cent with 3 of the “Big Four” banks losing between 0.3 and 0.7 per cent.
Westpac Banking traded flat after the lender said it would sell one of its financial advisory businesses to pension fund Mercer Australia.
Gold and energy stocks slumped 2.6 per cent and 0.9 per cent, respectively.
Qantas Airways rose 1.1 per cent after the flag carrier signalled changes to domestic capacity and fares to counter surging fuel prices, saying it expects strong demand for air travel.
US Fed hiked its benchmark overnight interest rate by 50-basis-point - the first of that size in more than 20 years, with most participants in the meeting backing furthur hikes.
Following Wednesday’s rate hike, Reserve Bank of New Zealand Governor Adrian Orr said that going early and fast remains the best path for achieving its primary inflation and employment objectives.
The Reserve Bank of Australia could raise rates again next month, but will be far less hawkish than the Fed or RBNZ, Marcustoday’s Jennings said.
New Zealand’s benchmark S&P/NZX 50 index closed 0.6 per cent lower at 11,102.84. REUTERS
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