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- ASX 200 edged 0.8% higher today, snapping a three-day losing streak and mirroring gains in US markets.
- In the US, Federal Reserve increased rates by 50 basis points, dashing worries that it might raise rates by 75 basis points.
- Asian shares rose as the Fed’s less hawkish tone lifted investor sentiment.
Globally, investors digested the Federal Reserve’s biggest interest-rate increase since 2000. In response to burgeoning inflation pressures, the US Central Bank increased interest rate by half a percentage point and outlined a program in which it eventually will reduce its bond holdings by US$95 billion a month. Will higher borrowing costs and a lessening balance sheet deliver a soft landing that ducks recession while compressing inflation? Time will tell!
Share markets have been prepared for such tightening moves, but they have been volatile throughout the year so far. After Fed’s announcement yesterday, stocks are leaping higher while treasury yields seem to be backing-off their earlier highs. Markets across the world will now wait to see if central banks continue raising rates aggressively in the coming months.
There are other factors impacting share markets right now- Covid-related lockdowns in China are worsening supply chain disruptions while the Russia-Ukraine war continues. In Australia, the election fever has finally set in. Not to forget, inflation is close to peaking in most economies.
How did ASX 200 perform?
The Australian share market was set to open higher today, with futures pointing to a rise of 39 points, or 0.5% at the open. In late morning trade today, the ASX 200 was 0.6% higher, rising to a high of 7354.8 propelled by a big boost from miners, the energy sector and tech stocks.
Eventually, the benchmark index closed up, gaining 60.00 points or 0.82% to 7,364.70 and crossing above its 200-day moving average. Over the last five days, the ASX 200 index is virtually unchanged, but is down 1.07% for the last year to date.
On the sectoral front, 10 of 11 sectors finished higher, barring financials. Information Technology was the best performing sector, gaining +2.54% and +0.61% for the past five days.
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Who gained? Who lost?
The top performer today was ADBRI Limited (ASX:ABC), up over 7%. It was followed by Imugene (ASX:IMU). Next up was Liontown Resources (ASX:LTR), up over 6%. Other gainers of the day were Regis Resources (ASX:RRL) and Novonix Limited (ASX:NVX). ABC, LTR and RRL have released their respective Macquarie Australia Conference presentations to the market.
On the other side, in the red zone of the ASX 200, Janus Henderson (ASX:JHG) was the biggest laggard, its stock down over 12%. Other stocks in this zone were Ansell Limited (ASX:ANN), Nanosonics (ASX:NAN), Polynovo Limited (ASX:PNV) and Life360 (ASX:360). PolyNovo is assessing several candidates for the CEO role and is confident that an appointment will be done before the end of the current financial year.
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Asian and global market
Asian shares rose today as the Federal Reserve's less hawkish tone lifted investor sentiment. Shares tracked Wall Street gains after the US central bank raised interest rates by 50 basis points but sounded a less hawkish tone than earlier feared.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.52%. Indian shares rebounded. Japanese and Korean markets remained closed for public holidays. China's shares defied the broader rally with rising Covid-19 cases and a strict lockdown weighting on sentiment.
Overnight on the Wall Street, the S&P 500 closed 3% higher, the Dow Jones surged by 2.8% and the Nasdaq jumped by 3.2%.
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