US Rate Hike Expected Tomorrow

US stocks were higher overnight with the Dow Jones the better performing of the two major indices. Both the Dow and S&P 500 made new record highs although both closed slightly down from the highs of the day. Although the Nasdaq 100 closed slightly down for the day, TSLA had another strong day, climbing 3.7%, making the one week gain for the stock approximately 13%. The ASX 200 has broken back above 6,000 and is due to stay there, at least for today, according to futures pricing which suggests a flat open.

Gold had a relatively volatile session, initially falling as low as $1,237 per ounce before quickly recovering back to $1,244. The two-day Federal Reserve meeting starts today with an announcement on the interest rate decision due early tomorrow morning (AEDT). A rate hike of 25 basis points is widely expected and could be part of the reason for the weakness in gold. Some also believe that gold is in direct competition with cryptocurrencies, a battle which gold is currently losing. Bitcoin reached a new record price overnight, climbing over US$4,000 from the recent low. According to some estimates, this now places the rise in bitcoin price above that of the Tulip mania from Holland in 1637 as measured over the preceding three years.  

Australian employment data will be released tomorrow. The unemployment rate is set to remain steady at 5.4% with 18,100 new jobs expected to be created. 

Data Releases:

–    US CPI 12:30am AEDT

–    US Interest Rate Decision 6:00am AEDT

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This article was written by William O’Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.