How would ASX 200 trade after Fed gives no clue on tapering bond buying?

Summary

  • The Australian share market is expected to open higher on Thursday after US stocks closed little changed overnight.
  • In its two-day monetary policy meeting, the US Federal Reserve gave no clue when it might begin to taper its government bond purchase.
  • The ASX 200 index is expected to start the day 0.25% higher.

The Australian share market is expected to open higher on Thursday after US stocks closed little changed overnight despite the US Federal Reserve giving no clue when it might begin to taper its government bond purchase. However, Fed yet again said that economic recovery was on its way, even as coronavirus infections were rising.

The benchmark ASX 200 index would start the day 18 points or 0.25% higher, according to the latest ASX futures. On Wednesday, the benchmark fell 0.7% to 7,379.3 points.

On Wall Street, the Dow Jones fell 0.35%, the S&P 500 traded flat, and the NASDAQ jumped 0.7%.

Source: © Stbernardstudio   | Megapixl.com

After the end of the two-day long monetary policy meeting, which ended on Wednesday, Fed Chairman Jerome Powell said it was not the time to hike interest rates. The exact timing to start debt purchase taper would depend on incoming data, he added.

On the recent rise in consumer prices, Powell said that accelerating inflation resulted from "transitory factors."

Meanwhile, the Chinese stock market finally showed signs of stability after being severely hit this week on deepening regulatory crackdown concerns.

READ MORE: 5 exciting consumer staple stocks on the ASX

Dollar and bond yields

The US dollar eased on Wednesday in the absence of a clear timeline for tapering Fed asset purchase. The dollar index was 0.149% lower at 92.324.

                     

Global Market Roundup || How Would ASX 200 Trade After Fed Gives No Clue On Tapering Bond Buying?

 

Despite initially climbing after the Fed meeting, US Treasury yields retreated. Benchmark 10-year yields fell to 1.228%.

Crude oil prices rise

Following a higher-than-expected fall of US crude inventories, oil prices surged higher on Wednesday.

Brent crude closed 0.4% higher at US$74.74 a barrel, while West Texas Intermediate (WTI) crude settled 1% higher at US$72.39.

Stocks of major energy companies such as Santos Ltd (ASX:STO) and Woodside Petroleum Ltd (ASX: WPL) could trade higher on Thursday.

READ MORE: 10 ASX-listed metals & mining penny stocks under the spotlight for August

Gold prices inch higher

Gold prices recovered from the initial fall after the Fed statement that the US economy faces risks from the Delta coronavirus variant.

Spot gold was up 0.1% at US$1,801.10 per ounce by 2:56 p.m. EDT. U.S. gold futures were little changed at US$1,800.50.

The leading gold mining stocks, including Northern Star Resources Ltd (ASX:NST) and Newcrest Mining Ltd (ASX:NCM) could trade higher on Thursday.

Metals’ update

Slowing Chinese demand for construction material hit Shanghai steel futures, which dipped for a second straight session on Wednesday. On the Dalian Commodity Exchange, iron ore edged up 0.2% at 1,137.50 yuan a tonne.

Source: ©  Ptlee  | Megapixl.com

READ MORE: Flick through 4 ASX shares as crypto mining enthusiasts’ bat for nuclear energy

Bitcoin bounces back

Bitcoin bounced back above US$40,000, jumping 2.4% to US$40,428.38. The recovery was after the traders drew confidence from recent positive remarks by influential investors and short-sellers.

READ MORE: 10 ASX-listed cannabis stocks for August 2021

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