The ASX headed towards its sixth advance in seven sessions as regional equity markets welcomed signals the US Federal Reserve is in no hurry to raise rates.
At 1pm EST the ASX 200 was 38 points or 0.7% firmer at 5377 and on track for its first winning week in a month and a half. US dollar-sensitive stocks led the charge after the greenback retreated overnight as the Fed left its key rate on hold and cut the number of rate increases it anticipates next year from three to two. The gold sector surged 6%, metals & mining 3.5%, materials 2.6% and energy 1.9%. The rally was tempered by declines in utilities -0.7% and consumer discretionary -0.1%.
"While the Fed has given a strong signal of a hike in the December meeting, US stocks still soared," IG market analyst Chris Weston said. "The Fed are certainly not committing to a December hike, but when you see three members dissent in favour of a hike at this meeting, you know it's close. Importantly, at the same time, you hear that the risks are now ‘roughly balanced’, while they talked about being ‘on hold for the time being’. They want to hike in December, but if something adverse happens in the next month or two that impacts the already flagging market-based inflation expectations, they won’t hesitate to push this call back."
Asian markets cheered the decision. China's Shanghai Composite rose 0.9% and Hong Kong's Hang Seng 1.54%. Japan's Nikkei was closed for a holiday. Dow futures eased seven points or 0.04%.
Crude oil futures gained another 45 cents or 1% this morning at US$45.79 a barrel. Gold futures were $6.10 or 0.46% higher at US$1,337.40 an ounce. The dollar was buying 76.33 US cents.
The Fed continues to dance to the market's tune, so the rally resumes. Some life coming back into the spec end here, but the scale of the pullbacks remains troublesome. I began picking up AVQ earlier than wise. GMC was my other buy. No joy from either yet.
