Banks rally as Fed holds rates steady: Aus shares to fall slightly at open

Market Reports

by Jessica Amir

The Australian share market looks set to open slightly lower based on ASX futures and mixed messages from Wall Street.

Bank stocks rallied and outperformed the market after The Fed kept rates unchanged when it cited that the US economy only grew 0.7 per cent in the first quarter. The S&P 500 fell 0.14 per cent, while the Dow Jones closed just marginally higher with McDonalds adding the most gains.

The tech heavy Nasdaq however closed in the red, after reaching all time highs earlier in the week. It comes as tech giant Apple reported a mixed quarter.

US economic news

The Federal Open Market Committee (FOMC) has voted to keep its key interest rate steady, with the benchmark rate target holding at 0.75% to 1.00%. It comes as the FOMC expressed concerns about the pace of economic growth.

Although, the decision was in line with expectations, it noted that “economic activity slowed” while “household spending rose only modestly”.

Local economic news

The RBA Governor Philip Lowe will make a speech following Tuesday’s board meeting to keep the cash rate at it historical low of 1.5 per cent.

Meantime, the ABS will announce the International Trade data for March, which is expected to show another sizeable surplus.

To the figures: Wall Street closed mixed yesterday: The Dow Jones Industrial Average gained 0.04 per cent to close at 20,958, the S&P 500 lost 0.1 per cent to close at 2,388 and the NASDAQ fell 0.4 per cent to close at 6,073.

European markets closed mixed: London’s FTSE fell 0.2 per cent, Paris lost 0.1 per cent and Frankfurt gained 0.2 per cent.

Asian markets, not much happening there: Tokyo’s Nikkei and Hong Kong’s Hang Seng were not trading for the public holiday, and China’s Shanghai Composite fell 0.3 per cent.

And back home, the Australian share market closed lower yesterday: The S&P/ASX 200 Index closed 58 points down to finish at 5,892. On the futures market the SPI is 6 points lower.

Company news

Downer EDI (ASX:DOW) has made a second supplementary takeover bid to buy to all of the Spotless Group Holdings Ltd (ASX:SPO) shares that it doesn’t already own, for $1.15 cash per share. The engineering company’s board says the offer of $1.15 per cash per share provides compelling value to Spotless Shareholders. Downer EDI’s final offer in the absence of a superior proposal, and at a 59% premium to the closing price of Spotless shares on 20 March 2017. Shares in Downer EDI (ASX:DOW) last traded 1.51 per cent lower yesterday to $5.88.

Ex-dividends 

Four companies are going ex-dividend today:

Australian Pharmaceutical Industries (ASX:API) is paying 3.5 cents fully franked,
Duet Group (ASX:DUE) is paying 3 cents (0 franking)
Henderson Group (ASX:HGG) is paying 17.51 (0 franking) and
Waterco Limited (ASX:WAT) is paying 2 cents fully franked. 

Currencies

The Australian Dollar at 7:30AM was buying 74.24 cents, 57.70 Pence Sterling, 83.67 Yen and 68.21 Euro cents.

Commodities

Gold has lost $19 to $US1,239 an ounce. Silver fell 35 cents $US16.48. Oil has dropped 57 cents to $US47.55 a barrel.