Investors become cautious in response to US Fed's meeting minutes

Stock Markets

Australian shares are poised to open lower today after the US Fed's March meeting minutes added ambiguity regarding the direction of the next move in rates. The meeting minutes which were released Thursday morning AEST, showed that the participants of the meeting noted that the federal fund rate could shift in either direction based on incoming data and other developments. Investors reacted cautiously to this as it implied that policymakers could change their minds on whether the Fed's next move should be to raise or lower rates. In the meeting minutes, the Fed signalled that it will not hike rates this year amid a slowing global economy and announced a plan to end its balance sheet reduction program by September. Earlier this week, the International Monetary Fund said the global economy was slowing more than expected and a sharp downturn could require world leaders to coordinate stimulus.

Wall Street's major indexes closed marginally higher overnight, following the release of the Fed's March meeting minutes which implied that the committee does not expect to hike rates this year.  The Dow Jones, S&P 500 and NASDAQ 100 ended Tuesday's session up 6.58 (0.03%), 10.01 (+0.35%) and 54.97 (+0.69%) points respectively.

The benchmark S&P/ASX200 index closed 1.7 points (+0.03%) higher on Wednesday, bolstered by strong performance in the technology sector which acted to offset losses from the materials and energy sectors. The technology sector was collectively up 0.53%, while the materials and energy sectors were down 0.33% and 0.72% respectively. The big banks all closed in positive territory, led by Commonwealth Bank, up 0.71% to $70.75. Westpac was up 0.23%, NAB up 0.16% and ANZ up 0.12%.

ASX 200 futures are currently down 14 points.

Today's data releases: Melbourne Institute inflation expectations at 11am AEST, RBA's Guy Debelle speaks in Hong Kong at 12:30pm, Chinese consumer and producer price inflation at 11:30am; OPEC hold meetings, tonight US producer price inflation and three Fed board members speak

Commodities and Currencies

WTI crude prices retraced slightly overnight and are currently sitting at US$64.39 (-0.34%), while Brent crude closed in positive territory at US$71.73 (+1.59%).

Iron ore prices are down 0.3% at US$94.61 per tonne.

The spot price of gold is currently up 0.31% at US$1308.14.

The AUD is currently marginally down 0.03% at US71.69¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.