Australia’s share market is edging higher, after a US interest rate reaffirmed US Federal Reserve independence and its plan to tackle inflation, tempering fears of a brewing debt market crisis.
The S&P/ASX200 rose 11.5 points by midday, up 0.13 per cent, to 8,708, as the broader All Ordinaries improved by 11.1 points, or 0.13 per cent, to 8,885.6.
The local market shrugged off a weak Wall Street session after a widely-tipped US interest rate hike came with warnings of further monetary tightening ahead.
A reassertion of independence by the US central bank despite President Donald Trump’s demands for cuts relieved bond investors, sending global (and local) yields lower and easing global debt market jitters.
“Despite the risk of further rate rises ahead, long-term bond yields remained relatively steady overnight, with investors likely taking some comfort form the fact the Fed does seem serious about tackling above-target inflation after all,” Betashares chief economist David Bassanese said.
The hike would likely add pressure on the Reserve Bank to raise the official cash rate again, with markets already leading towards a hike on September 29.
“Further rate rises will add to the downward pressure on house prices, which in turn risks of more substantial slowing in consumer spending and housing construction,” Mr Bassanese said.
Oil prices also eased as Saudi Arabia outlined plans to restore its crucial East-West Pipeline to 50 per cent capacity within days, before returning to full-capacity within six weeks.
The Brent benchmark fell to $US105.80, sending Woodside, Santos, Viva and Ampol shares on the defensive.
Financials stocks did some heavy-lifting, with a more than one per cent advance as all big four banks tracked higher.
Raw materials were heading for a fifth loss in six sessions, as gold miners bled lower at the prospect of higher-for-longer US interest rates, which capped the outlook for the gold price which fell to $US4,283 ($A6,036) an ounce.
BHP traded flat and Rio Tinto dipped 0.4 per cent as iron ore futures fell below $US97 a tonne, while copper prices rebounded modestly.
Health care was the best-performing sector, up 1.3 per cent in a broad-based rally, with a strong lead from segment giant CSL.
The move came as the blood plasma giant’s chair Brian McNamee noted shareholder frustration in the company’s recent performance in via its annual meeting invitation.
In other company news, buy-now, pay-later player Zip Co has appointed former Austal chair Sarah Adam-Gedge as an independent non-executive director, adding to her board positions with Codan, Aussie Broadband, GrainCorp, Bravura and Cricket Australia.
The Australian dollar is buying 70.94 US cents, down from 71.31 US cents on Wednesday at 5pm as the Fed decision (and outlook) propelled the greenback higher against the major currencies.
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