Wall St mixed as Fed preps for March rate lift-off, BHP to return home on Friday: ASX to fall


Tech shares rallied after the Federal Reserve kept the interest rate unchanged. European markets rallied in anticipation of the FOMC outcome. Asian markets & ASX mixed on volatile moves. UK court gave its nod of approval for BHP's (ASX:BHP) unification.

The Australian sharemarket is set to fall after a mixed close on Wall St, in the wake of the news from the Federal Reserve.

US stocks mixed as Fed leaves rates on hold

US stocks closed almost at session lows after the Fed decided to keep interest rates unchanged, paving the way for the first interest rate rise to happen at its next meeting in March.

Fed Chair Jerome Powell told market participants that the central bank is prepared to become less accommodative with its stimulus this year, signalling rate rises, as inflation and supply chain issues persist, as well as the coronavirus. 

The Dow moved in over a 900 point range in another day of wild swings, showing you the volatility that continues to move on Wall St. 

Stocks started the session with solid gains, then accelerated as treasury yields rallied when the Fed decision hit, but comments from the Fed Chair Jerome Powell, clarifying his stance and the stance of the central bank, triggered equity markets to tumble in the final hour and a half of trade.

The knee jerk reaction from the stock market initially priced in a more aggressive tightening cycle, but as words from Mr Powell unfolded, traders realised that the risk of more rate hikes were higher after he didn’t rule out raising rates at every meeting, or even sooner, which saw the rally fade.

Market participants was listening closing on how the Fed was going to trim its balance sheet. The statement from today said “the Committee expects that reducing the size of the Federal Reserve's balance sheet will commence after the process of increasing the target range for the federal funds rate has begun”. 

It will be interesting to see how they will strike a balance between suppressing inflation and limiting the decline in financial conditions as they take a hawkish stance.

Mattel wins rights to Disney’s princess line-up & Frozen

Let’s change gears to something fun, Mattel, the toy company won back the rights to produce toys based on Disney’s Frozen. The company also received the rights to Cinderella and Snow White dolls. Mattel had the rights to Disney’s dolls but lost it to rival Hasbro in 2016. Mattel’s version of Disney dolls are expected to hit store shelves next year. Shares closed 4.3 per cent. 

Meanwhile, the UK court has given its tick of approval for BHP’s unification set be effective on Friday, January 28. The news comes after BHP shareholders overwhelmingly voted in favour to collapse the two parent companies, and make the ASX its primary home. Let’s keep an eye out on how BHP shares will perform today.

Numbers on Wall St

At the closing bell, the Dow Jones lost 0.4 per cent to 34,168, the S&P 500 fell 0.2 per cent to 4,350 while the Nasdaq eked out a 0.02 gain at 13,542.

Across the S&P 500 sectors, there were two winners. Information technology was the best performer, up 0.7 per cent followed by financials, up 0.3 per cent. The rest closed lower led by real estate, 1.7 per cent, followed by materials, and industrials.

The yield on the 10-year treasury note rose 9 basis points to 1.87 per cent, gold dipped on a stronger greenback.

Figures around the globe

Across the Atlantic, in the lead up to the Fed outcome. European markets closed higher. Paris added 2.1 per cent, Frankfurt added 2.2 per cent and London’s FTSE gained 1.3 per cent.

On the London Stock Exchange, BHP gained almost 3 per cent, Rio added 2.3 per cent, BP advanced 3.8 per cent and Shell jumped 5.4 per cent.

Asian markets closed mixed. Tokyo’s Nikkei fell 0.4 per cent, Hong Kong’s Hang Seng added 0.2 per cent and China’s Shanghai Composite closed 0.7 per cent higher.

On Tuesday, the Australian sharemarket closed 2.5 per cent lower at 6,962.

SPI futures

Taking all of this into the equation, the SPI futures are pointing to a fall of 0.4 per cent.

Local economic news

The Australian Bureau of Statistics is set to release the international trade prices for the December quarter.

Ex-dividend

There is one company trading ex-dividend today, PRT Company (ASX:PRT) is paying 26 cents fully franked.

Dividend-pay

There are three companies set to pay eligible shareholders today 
Premier Investments (ASX:PMV)
360 Capital Group  (ASX:TGP)
360 Capital REIT (ASX:TOT)
Turners Automotive Group (ASX:TRA)

IPOs

There is one company set to make its debut on the ASX today. Keep an eye out for for Haranga Resources (ASX:HAR) after raising $6.5 million.

Quarterly updates

There are six companies set to release quarterly updates.

Atlas Arteria Group (ASX:ALX)
Cooper Energy (ASX:COE)
Evolution Mining (ASX:EVN)
Insignia Financial (ASX:IFL)
OZ Minerals (ASX:OZL)
Quantum Health Group (ASX:QTM)

Commodities

Iron ore has gained 0.2 per cent to US$138.10. Its futures are pointing to a rise of 1 per cent.

Gold has lost $35.90 or almost 2 per cent to US$1819 an ounce. Silver is down $0.39 or 1.6 per cent to US$23.51 an ounce.

Oil has gained $1.18 or 1.4 per cent to US$86.78 a barrel back to seven year highs as traders are anticipating higher crude prices on potential geopolitical risks. They’re also expecting OPEC+ to stick to their plans to deliver another mild increase to production at next week’s meeting, amid an inventory build as per the latest report from the Energy Information Administration.

Currencies

One Australian Dollar at 8:20 AM has weakened since Tuesday (71.46 US cents), buying 71.13 US cents, 52.86 Pence Sterling, 81.54 Yen and 63.31 Euro cents.

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