June's AI-picked stock updates now live. See what's new in Tech Titans, up 28.5% year to date.Unlock Stocks

Australia shares subdued after Fed tempers easing hopes, NZ dips

Published 26/06/2019, 12:26 pm
© Reuters.  Australia shares subdued after Fed tempers easing hopes, NZ dips
AUD/USD
-
US500
-
AXJO
-
BHP
-
RIO
-
NCM
-
RIO
-
SBM
-
FPH
-
AXMM
-
NST
-
NZ50
-

* Fed tempers aggressive rate cut hopes

* Financials lose, mining sector flat

* RBNZ holds rates

*

By Rushil Dutta

June 26 (Reuters) - Australian shares were subdued on Wednesday, in line with equities worldwide, after U.S. Federal Reserve officials dampened market expectations of aggressive rate cuts this year.

The S&P/ASX 200 index .AXJO fell 0.1% to 6,651.90 points by 0217 GMT. The benchmark was 0.1% lower on Tuesday.

Equity markets have rallied this month as investors priced in a rate cut as early as the Fed's July policy-setting meeting. While a 25 basis point cut is being seen as a certainty, many had even dared to expect a half percentage point cut.

St. Louis Fed President James Bullard tempered those expectations on Tuesday, saying he did not think the U.S. economy is dire enough to warrant a 50-basis-point cut in July, even though he pushed to lower rates last week. Fed Chairman Jerome Powell said the central bank was "insulated from short-term political pressures," thwarting U.S. President Donald Trump's demand for a significant rate cut.

"I suppose with the S&P 500 off about a percent or so, the markets have been running on a prospect of shift in Fed policy. Anything that undermines these expectations is going to have some sort of an impact," said Damien Hennessy,

co-founder of Heuristic Investment Systems.

The Australian financial sector, the biggest on the main index by weightage, led the losses on Wednesday.

The country's four biggest lenders were off in a range of 0.3%-0.6%.

Tuesday's Fed commentary gave the U.S. dollar some respite, as it edged up from three-month lows. That weakened the Australian dollar marginally, but not enough to support stocks of miners, many of which sell their goods in foreign markets for U.S. dollars.

The mining sub-index .AXMM was flat with BHP Group BHP.AX shares marginally lower, while Rio Tinto (LON:RIO) RIO.AX added 0.5%.

A resurgent dollar also knocked gold prices off a six-year peak. Aussie gold stocks, which track the precious metal, also declined in response.

Australian gold index heavyweight Newcrest Mining NCM.AX shed 1%, while smaller rivals St Barbara SBM.AX and Northern Star Resources NST.AX gave up 1.1% and 0.7% respectively.

New Zealand's benchmark S&P/NZX 50 index .NZ50 was marginally lower at 10,409.23 after the Reserve Bank of New Zealand stood pat on benchmark interest rates, maintaining it at a record low of 1.5%.

However, the central bank signalled that lower interest rates may be needed in the future, citing subdued domestic growth and global economic weakness. in industrials and utilities shares were offset by losses in healthcare and telecom stocks.

Medical devices maker Fisher & Paykel Healthcare FPH.NZ was the top decliner on the benchmark index, down 2%.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.