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Whatâs with the US Markets? Fed Raises Rates and Much More
The recent move by the Federal Reserve was expected by the broader markets and market participants. The US central bank ended the meeting by announcing a rate hike of 25 bps (basis points) which brings the target in the range of 2% to 2.25%. In addition, the Fedâs comments in the meeting reflected the hawkish tone and that it might come up with another rate hike in December this year primarily because of the robust performance of the overall economy as well as expectations that this could continue for a minimum time span of three years.
After Fed announces a hike, its statements reflected that the US economy would no more be witnessing an âaccommodativeâ monetary policy moving forward. However, the impact of the rate hike was also felt on the US dollar. The dollar has already been witnessing an uptrend, raising concerns over the economic performance of the emerging markets or EMs. Stronger dollar negatively impacts the performance as well as the currency of the emerging markets. The announcing of the rate hike affected the yield curve making it flat.
What impacted Australian markets?
On September 27, 2018, the Australian markets wrapped up marginally lower on back of the negative performance of the banking stocks. These stocks witnessed the impacts of the interim report of the Royal Commission which would be coming out within the next few days. S&P/ASX 200 ended the day at 6181.2 which implies the marginal fall of 11.1 points or 0.2%. Even the heavyweight stocks pulled the index lower, the losses on these stocks were marginal.
It seems like the market participants have opted for the defensive strategy while playing on the banking stocks as the interim report is still due. Among the major players, Westpac Banking Corporation (ASX:WBC) recorded 0.719% fall on September 27, 2018 while Australia and New Zealand Banking Group Limited (ASX:ANZ), Commonwealth Bank (ASX:CBA) and National Australia Bank Limited (ASX:NAB) witnessed the fall of 0.608%, 0.142%, and 0.437%, respectively.
At the end of trading session, Beach Energy Limited (ASX:BPT), Speedcast International Limited (ASX:SDA) and Nanosonics Limited (ASX:NAN) witnessed the rise of 7.538%, 6.107%, and 5.556%, respectively. The top performer in the sector was Beach Energy as the companyâs shares reached a level which was not seen from the last 31 years. The company came out with the strategy which focused on doubling the production within the time span of five years which pushed the price of the stock higher. In addition, the companyâs management revealed that it witnessed strong momentum as a result of Lattice Energyâs acquisition.
On the other hand, AGL Energy Limited (ASX:AGL) witnessed the fall of 1.123% on September 27, 2018 primarily because the regulator slapped a fine amounting to $56,000. This fine was imposed because of the companyâs decision to cut off the customerâs power for a time span of 4 months.
Jobs Report Release Impacted the Markets
On September 27, 2018, the Australian Bureau of Statistics reported that job vacancies witnessed the rise of 2,40,900 jobs in the month of August 2018 implying a quarterly rise of 3.4%. Compare to May as well as August 2017, it was down.
Interest rates
The Reserve bank of New Zealand has not announced any change in the interest rates. The countryâs interest rate, therefore, stood at 1.75%. However, the central bank is optimistic about the outlook for the economy.
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