Outlook: ASX braces to fall on US stimulus cut

Market Reports

The Australian share market is bracing to fall after Wall Street retreated following the US Federal Reserve’s decision to continue trimming its economic stimulus program. Investors were also jolted by hints of an interest rate hike from new the US central bank chair Janet Yellen after her first meeting in the role. 
 
Elsewhere political tensions between Ukraine and Russia continue to unnerve investors amid reports pro-Russian forces have moved in on Ukrainian navy bases in Crimea. Closer to home the mining sector is set to extend this week’s falls after commodity prices weakened overnight and price of gold took a tumble of almost 2 per cent. 
 
US economic news
 
Moving in line with expectations the US Federal Reserve has decided to cut its monthly bond buying program for its third straight meeting. The quantitative easing program which began in 2008 has been slashed by an extra $US10 billion to $US55 billion per month. 
 
Global markets
 
Wall Street snapped two days of gains and dropped on Wednesday following the Fed’s announcement: The Dow Jones Industrial Average dropped114 points to close at 16,222, the S&P 500 dropped 11 points to close at 1,861 and the NASDAQ dropped 26 to close at 4,308.
 
European markets ended mixed on Wednesday as traders awaited the Fed’s policy decision: London's FTSE 100 Index lost 32 points, France's CAC 40 lost 5 points and Germany's DAX added 35 points.
 
Asian markets also finished mixed on Wednesday ahead of the Fed’s call: Japan’s Nikkei added 51 points, Hong Kong’s Hang Seng lost 15 points, and China’s Shanghai Composite lost 3 points.
 
The Australian share market drifted over yesterday’s session to end slightly higher ahead of the outcome from the US Federal Reserve’s meeting: The S&P/ASX 200 Index rose 11 points on Wednesday to finish at 5,356. On the futures market the SPI is 34 points lower. 
 
Currencies
 
The Australian dollar hit a new three-month high yesterday but has dropped $US0.01 following the Fed’s call and at 7:25am was buying $US0.9041, 54.69 Pence Sterling, 92.63 Yen and 65.38 Euro cents.
 
Economic news due out today
 
Commonwealth Bank of Australia (ASX:CBA): Business sales indicator for February
 
Reserve Bank of Australia (RBA): Quarterly bulletin. 

Company news
 
Qantas Airways Limited (ASX:QAN) was given a boost yesterday after its largest shareholder increased its stake in the company to 17.5 per cent. US investment giant Franklin Resources and its affiliates took advantage of the airline’s stumbling stock price. The purchase comes just week after Qantas reported a record first half loss of $235 million and confirmed it is axing 5,000 jobs. Shares in Qantas Airways rose 0.46 per cent on Wednesday to close at $1.09. 
 
Discovery Metals Limited (ASX:DML) jumped yesterday after inking a joint venture agreement for its Dikoloti nickel project in Botswana. Under the deal Discovery and its current Japanese JV partner will allow Botswana’s BCL Limited to earn a 51 per cent interest in the project. BCL will only gain the Dikoloti stake if it is able to convert the prospecting licence into a mining licence applicable under Botswana law. Shares in Discovery Metals jumped 23.08 per cent on Wednesday to close at $0.032. 
 
Ex-dividends today
 
Prime Financial (ASX:PFG) paying a 0.4 cent fully franked dividend
The Reject Shop (ASX:TRS) paying a 21.5 cent fully franked dividend
 
Ex-dividends tomorrow
 
Webjet Limited (ASX:WEB) paying a 6.25 fully franked dividend
 
Commodities 

Gold has tumbled $17.70 to $US1,341 an ounce for the April contract on Comex. 
Silver has fallen $0.03 to $20.83 for May. 
Copper has added $0.03 to $2.98 a pound. 
Oil has firmed $0.67 to $US100.37 a barrel for April light crude in New York.