The Australian share market is set to surge at the open, after US stocks rallied to near-record highs after the Federal Reserve announced it would trim its asset-purchase program by $US10 billion per month.
The Fed’s decision marks the beginning of the end of its massive support program, as it moves to reduce its monthly asset purchases to a total of $75 billion per month.
Federal Reserve chairman Ben Bernanke said the recovery was far from complete, however there were significant signs of improvement.
The American central bank said it was concerned about low inflation levels and gave a strong hint that low interest rates would be maintained for the time being.
Currencies
The Australian dollar pushed slightly lower on the news, suggesting the anticipated tapering had already been priced in. At 8:20AM the Aussie was buying $US88.38 cents, 54.02 Pence Sterling, 91.99 Yen and 64.65 Euro cents.
Figures
Wall Street surged as investors were relieved the stimulus reduction was milder than first feared: The Dow Jones Industrial Average jumped 293 points to close at 16,168, the S&P 500 added 30 points to close at 1,811 and the NASDAQ lifted by 46 points to close at 4,070.
European markets were strong following good German business confidence data and improved British unemployment.London’s FTSE gained 6 points, Paris added 41 points and Frankfurt rallied by 97 points.
Asian markets were mixed. The Nikkei share average jumped 2 per cent as hedge funds bet the outcome of the US Federal Reserve's policy meeting would not materially alter a promising outlook for Japanese equities. Tokyo’s Nikkei jumped by 309 points, Hong Kong’s Hang Seng added 75 points, but China’s Shanghai Composite dropped 3 points.
The Australian share market closed slightly lower yesterday. The S&P/ASX 200 index closed 7 points down to finish at 5,096. On the futures market the SPI is 50 points up.
Economic news
The Reserve Bank of Australia will release its December quarter Bulletin today.
And the Australian Bureau of Statistics will release its national financial accounts for the September quarter.
Company news
National Australia Bank Limited
(ASX:NAB) will hold its annual general meeting today. The update comes after the lender’s head of business banking painted an upbeat picture of the economy in 2014, saying there are growing signs clients will lift their borrowing as the global outlook improves. NAB shares lifted 0.03 per cent yesterday to close at $33.41.
Graincorp Limited
(ASX:GNC) will also hold its annual general meeting today. Shareholders will no doubt be keen to hear what the company plans to do next after the Federal Government last month blocked a $3.4 billion takeover offer from US giant Archer Daniels Midland. CEO Alison Watkins has since tendered her resignation. Shares in Graincorp lifted 0.61 per cent yesterday to close at $8.19.
Commodities
Gold is up $4.90 to $US1,235 an ounce for the February contract on Comex. Silver is up $0.21 to $20.06 for March. Copper is flat at $3.32 a pound. Oil is up $0.58 at US$97.58 a barrel for January light crude in New York.
