The local share market has gained ground for a second day, closing at a one-week high ahead of what’s being described as the most important Federal Reserve meeting in a decade.
The benchmark S&P/ASX200 index on Wednesday finished up 60.2 points, or 0.87 per cent, to 7,015.6, while the broader All Ordinaries rose 58.5 points, or 0.82 per cent, to 7,200.7.
Brisbane-based City Index analyst Matt Simpson told AAP he would be getting up before dawn for Thursday’s Fed meeting, where the central bank is mostly expected to hike rates another 25 basis points.
“I’ve got an assumption what’s going to happen, but the truth is nobody really knows,” he said.
“What everyone’s finding a little off this time around is, you usually go in with a bit of confidence about where the Fed’s going – whereas this one, the backdrop is totally different,” he said.
“It’s not usual to have this turmoil heading into the meeting – we’ve not really had this sort of thing since 2008, 2010.”
While the recent banking failures have led some to call for a pause in rate hikes, Mr Simpson said he saw that as unlikely, considering how hawkish Fed chairman Jerome Powell was just two weeks ago.
Pausing might even cause a panic, he added.
What markets will be watching for is the Fed’s “dot plots” that chart where the central bank expects rates will go for the rest of the year, as well as Powell’s commentary at a press conference following the meeting.
“You can over-analyse these things, and that’s probably half the problem,” Mr Simpson said.
“My guess is we’re going to have some pretty nasty price action afterwards, unless we get a binary outcome from the meeting. But because the meeting has quite a complex background, the chance of a binary outcome is slim.”
Mr Simpson noted that the ASX200 had closed above its 200-day moving average, but only barely.
“It’s not enough to be confident that it’s a great, compelling breakout,” he said. “So the ASX is truly in the hands of the Fed meeting and how it trades tomorrow at this stage.”
Every sector of the ASX finished higher on Thursday except for the interest rate-sensitive property sector, which fell 0.5 per cent.
Energy was the biggest gainer, rising 4.2 per cent as Brent crude rebounded to a three-day high of $US75 a barrel.
Woodside rose 5.2 per cent to $32.80, Santos added 3.3 per cent to $6.99 and Ampol gained 2.9 per cent to $30.60.
The consumer staples sector rose 1.8 per cent as Woolworths climbed 2.2 per cent to $37.32.
The heavyweight financial sector finished up 0.6 per cent, with the Big Four banks fading in the afternoon session after posting stronger morning gains.
CBA finished up 0.6 per cent at $97.14, ANZ rose 0.4 per cent to $22.85, and NAB and Westpac both edged 0.1 per cent higher to $28.05 and $21.43, respectively.
Insurers rebounded, with QBE finishing up three per cent and IAG gaining two per cent.
In the heavyweight mining sector, BHP advanced 0.7 per cent to $43.84, Fortescue climbed 1.3 per cent to $21.03 and Rio Tinto added 0.3 per cent to $115.45.
Goldminers were down amid the shift in sentiment, with Northern Star falling 3.6 per cent and Newcrest dropping 1.1 per cent.
Latitude Group fell 7.1 per cent to $1.12 as it resumed trading for the first time since a major hack of its customer data was detected last week. That cyber attack was worse than originally thought, the personal finance company told the ASX on Wednesday.
KMD Brands rose 1.1 per cent to 95c as the Rip Curl and Kathmandu owner announced it had returned to profitability in the first half, making $NZ14 million on sales of $NZ547.9m in the six months to January 31.
The Australian dollar was buying 66.94 US cents, from 66.90 US cents at Tuesday’s ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Wednesday up 60.2 points, or 0.87 per cent, at 7,015.6.
* The broader All Ordinaries gained 58.5 points, or 0.82 per cent, to 7,200.7.
One Australian dollar buys:
* 66.99 US cents, from 66.90 US cents at Tuesday’s ASX close
* 88.72 Japanese yen, from 87.82 Japanese yen
* 62.21 Euro cents, from 62.45 Euro cents
* 54.77 British pence, from 54.58 pence
* 107.87 NZ cents, from 107.66 NZ cents
(Australian Associated Press)