daytrades feb 19 afternoon

Half-time round-up:

Australian shares were little changed at lunchtime in cautious trade after the U.S. Federal Reserve moved to tighten monetary policy.

At lunchtime the ASX 200 was down 2 points or 0.04% at 4653, well short of the 45-point up-day anticipated by futures traders before the Fed announced a hike in the discount lending rate by 0.25% to 0.75%. The rise had been flagged last week but traders had not expected the Fed to move so quickly. Dow futures fell away immediately and were recently at -81, pointing to a soft end to an up-beat week.

Gold and oil futures slumped as the U.S. dollar rallied sharply in anticipation of higher interest rates. The spot gold price was recently at $1,103.10 an ounce, down around $20 or nearly 2% from where it traded before the Fed announcement. Crude futures slid 1.2% to $78.09 a barrel.

The U.S. dollar index, which measures the greenback against a basket of currencies, spiked from 80.38 ahead of the news to trade recently at 81.14, up 0.9%.

"Although the Fed went out of their way to say that this does not equate to a change in their monetary policy outlook, action speaks louder than words," said the director of currency research quoted on MarketWatch. "The most important takeaway is that the Fed is beginning to implement an exit strategy which is more than what many of the other central banks are doing and therefore this action will be extremely positive for the dollar."

Most Australian sectors were weaker at lunchtime, with gold down 1.6%, financials off 0.1% and miners down 0.3%. Defensive sectors were generally stronger.

Elsewhere, Reserve Bank governor Glenn Stevens dismissed suggestions by opposition frontbencher Barnaby Joyce that Australia risked defaulting on its debts if government borrowing continued to rise. "There has never been an event of sovereign default by Australia," Mr Stevens told a parliamentary hearing in Canberra. "I very much doubt there ever will be."

Asian markets were weaker. Japan's Nikkei was off 0.7% and Hong Kong's Hang Seng down 0.8%.


A disappointing outcome from a very nice market set-up this morning until the Fed announcement. Plenty of fallen angels among the specs - OBJ, BML, GBZ, SSN, SMA, LMG... Hope no one has been badly burnt. I managed quick scalps on two of them - BML and GBZ - for a strong end to a mediocre week. Also rode PAN from 1.725 and hold OMH from 1.70.

PS In view of today's darkening US futures, this afternoon's Scottish gag is:

Q: How many Scotsmen does it take to change a light bulb?
A: Och! It's no' that dark!