Morning traders. Thanks Trees and after-market regulars.
Market wrap:
The share market recovery looks set to continue after key commodity prices improved and Wall Street shrugged off the prospect of a rate rise as soon as September.
The September SPI200 futures contract rallied 33 points or 0.6% to 5606 as US stocks extended gains after the Federal Reserve left its key rate on hold and offered few clues to the timing of the first increase.
The S&P 500 advanced for a second day to a final gain of 15 points or 0.73% as the Fed wrapped up a two-day meeting with a policy statement. The Dow added 121 points or 0.69% and the Nasdaq 23 points or 0.44%. Stocks wobbled briefly following the release of the Fed statement in the afternoon before moving decisively higher.
"The statement was a little more hawkish than I expected and they talked about progress in the labour market and inflation lagging," Peter Cardillo, chief market economist at Rockwell Global Capital in the US, told CNBC. "The fact that they gave a slight upgrade to the housing market, etc, leaves the door open for a rate hike in September."
The Fed said employment “continued to improve, with solid job gains and declining unemployment” and the housing market “has shown additional improvement”. "The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labour market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."
Although the statement included no major revelations, tweaks to the language around the jobs market and inflation gave pundits plenty to analyse, with most concluding that the Fed may still move in September despite recent ructions in Greece and China.
"These little tiny tweaks certainly suggest they want to raise rates," Deutsche Bank chief US economist Joseph LaVorgna told CNBC. "I don't think they decided which meeting it is. To them it's a toss-up—September or December. This is very much in line and consistent with what [Fed Chair Janet] Yellen has said and the Fed has said."
Recent US economic data has been uneven, with a slump in consumer confidence announced on Tuesday night followed by news last night that pending house sales retreated from a nine-year high last month. The decline was the first in six months. Read more here.
Energy stocks led the market for a second day as crude oil recorded its second best rise of the month despite a post-Fed rally in the greenback. The energy ETF rallied 1.36%. West Texas Intermediate crude oil for September delivery settled 81 cents or 1.7% ahead at US$48.79 a barrel as traders welcomed the Fed's bullish outlook for the economy.
BHP and Rio Tinto extended their recoveries from six-year lows in the US after iron ore rose for a third day. BHP gained 2.35% and Rio Tinto 1.88%. Spot iron ore for import to China yesterday jumped $3.10 to US$55.30 a dry ton. A rival measure, ore delivered to Qingdao, surged 4.6% to $US55.89 a dry metric ton, its biggest rise in more than two weeks. Read more here.
Gold stocks rallied as the precious metal improved in the aftermath of the Fed statement after settling lower in the lead-up. The NYSE Arca Gold Bugs index bounced 2.5%. Gold for August delivery settled $3.60 or 0.3% lower at US$1,092.60 and was lately trading back near break-even at US$1,095.90.
Copper rebounded with the Shanghai Composite, which yesterday bounced 3.44% with a flurry of late buying. In London, copper added 0.6%, lead 0.2% and aluminium 0.4%. Nickel and zinc dropped 0.7%. Tin closed unchanged. US copper for September delivery was recently up 0.3% at US$2.41 a pound.
European stocks took their cues from the market recovery in China and upbeat US equity futures ahead of the Fed. The Stoxx Europe 600 rose 1.02%, Germany's DAX 0.34%, France's CAC 0.81% and Britain's FTSE 1.16%.
The dollar was this morning buying 72.97 US cents.
TRADING THEMES TODAY
EXTENDING THE RALLY: Plenty of good news overnight, with China rebounding nicely late yesterday, Europe cementing another solid rise and the US taking a fairly hawkish Fed statement in its stride. Yellen and co managed to leave a September rate rise on the table without spooking the market. Although the initial reactions to Fed statements are sometimes reversed next session, the momentum on world markets at present is upwards and should carry the ASX to another decent gain today. Good news also flowed from commodity markets, where energy and resource stocks were again among the standouts in the US, thanks to gains in crude, copper and iron ore. Iron ore is now officially in a bull market, would you believe, according to the AFR (link above). Biotechs were weak in the US - the Nasdaq Biotechnology Index eased 1.29%.
ECONOMIC NEWS: RBA Governor Glenn Stevens is due to address a Sydney conference at 10.30am EST. June building approvals are due at 11.30am, along with quarterly import prices. The economic news-flow heats up tonight in the US with advance GDP figures and the advance GDP price index, weekly jobless claims and the introduction of a new measure called the 'Goods Trade Balance'.
