The Australian sharemarket is tipped to open slightly higher, with modest gains on Wall Street overnight. The Australian dollar slumped to a fresh six-month low on the back of US Fed speech, with chair Janet Yellen maintaining a dovish stance on interest rates.
What you need2know:
• SPI futures up 3 pts at 5404
• AUD at 89.64 US cents, 97.13 Japanese yen, 69.62 Euro cents and 55.13 British pence.
• In the US, S&P +0.1%, Dow +0.2%, nASDAQ +0.2%
• In Europe, Euro Stoxx 50 +0.5%, FTSE -0.2%, CAC +0.5%, DAX +0.3%
• Iron ore slips 0.4% to $US84.20 per metric tonne
• Spot gold down 0.6% at $US1228.04 an ounce
• Brent oil is 0.3% lower at $US98.77 per barrel
What’s on today
Scotland vote on independence, Australian industry employment data, US August housing starts, NZ second-quarter GDP.
Stocks to watch
Deutsche Bank gives gold and copper miner OceanaGold a “buy” rating and a 12-month price expectation of $3.30 a share.
Deutsche Bank has a continued “buy” rating for fibre and cement building product manufacturer James Hardie Industries and a 12-month price expectation of $18.96 a share.
Morningstar has a conservative view on Qantas’s future growth, with a “hold rating” and a fair value price expectation of $1.20 a share.
Morningstar has an “accumulate” rating for medical business Primary Health Care on the back of a fair value price expectation of $5.00 a share.
Currencies
David de Ferranti, market analyst at FXCM, says traders are mindful that the US Federal Reserve is set to finish its enormous Quantitative Easing program next month and want firmer guidance on when rate rises may begin. They will be paying particularly close attention to whether the phrase ‘considerable time’ is dropped from the statement, he says. “If Yellen delivers a more explicit timeline or set of data dependent conditions for an eventual rate rise it would likely help propel the greenback further, which in turn could see the Aussie retest the 90 US cent level.”
Commodities
Canny Scots have rushed to buy gold, pushing investment in the traditional safehaven up by more than 40 per cent.
United States
The US Federal Reserve has renewed a pledge to keep interest rates near zero for a “considerable time” and repeated concerns over slack in the United States labour market, standing firm against calls to overhaul its policy statement. Many economists and traders had expected the central bank to alter the rate guidance it has provided since March, given generally improving data on the US economy’s performance.
The Dow Jones industrial average was rising 45.53 points, or 0.27 per cent, at 17,177.5, the S&P 500 was gaining 5.75 points, or 0.29 per cent, at 2004.73 and the Nasdaq Composite was adding 18.37 points, or 0.4 per cent, at 4571.13 following the Fed statement.
Europe
European equities advanced in cautious trading on Wednesday ahead of the US Federal Reserve statement for September. However, British equities underperformed, as investors remained jittery ahead of Scotland’s referendum on independence on Thursday.
Britain’s blue-chip FTSE 100 index closed down 0.2 per cent, against a 0.4 per cent gain for the FTSEurofirst 300 index of top European shares to 1385.09 points. The European index hit a two-week low in the previous day. Germany’s DAX added 0.3 per cent and France’s CAC 40 climbed 0.5 per cent.
Asia
Tokyo stocks closed down 0.14 per cent on Tuesday as investors retreated to the sidelines ahead of the Fed. The Nikkei 225 index at the Tokyo Stock Exchange slipped 22.86 points to finish at 15,888.67, while the Topix index of all first-section issues was down 0.45 per cent, or 5.90 points, at 1304.96.
South Korea’s Kospi index advanced 1 per cent.
What happened yesterday
Australian shares declined for the sixth session in a row ahead of a highly anticipated announcement at the conclusion of the September US Federal Open Markets Committee meeting.
News of monetary stimulus in China fuelled gains in the miners, but was not enough to lift the index as the big four banks fell heavily.
The benchmark S&P/ASX 200 Index lost 0.7 per cent on Wednesday to 5407.3 points, while the broader All Ordinaries Index shed 0.6 per cent to 5411.4 points. Meanwhile, the Australian dollar also continued to slide, fetching US90.67¢ when the ASX closed.