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This morning, the Fed delivered as expected, while the rhetoric led to volatility but ultimately a mixed close for stocks:
• The Fed cut interest rates by 0.25% as expected and pencilled in 2 more cuts before Christmas.
• However, looking ahead at the outlook for additional rate moves, Powell was cautious, saying the Fed was now in a “meeting-by-meeting situation.”
• The vote was 11-1, with Governor Miran dissenting in favour of 0.5%; he will now be on Trump’s Christmas card list.
• Chair Jerome Powell pointed to growing signs of weakness in the labour market to explain why officials decided it was time to cut rates after holding them steady since December amid concerns over tariff-driven inflation.
The ASX gave back ground today after opening only a touch softer; selling quickly set in as traders sat on their hands amid a general risk off feel ahead of the Fed’s rate call tonight. The sharp selloff was met some buying at the ~8800 level, bouncing midmorning but tracked sideways into the afternoon.
The market managed to grind out a gain today, helped along by the miners, with particularly strong showings from gold, iron ore and uranium as all three surged on different drivers – we’re taking a breather on gold and took a profit on our Evolution Mining position. Not a lot happening on the macro side to move markets today as all eyes await the Fed rate decision on Thursday, though bits and pieces on the stock front kept things interesting across the retail and resources space.
We are amending two portfolios this morning.
The ASX 200 slipped 0.1% on Monday as investors continued to “buy the dip”, allowing the market to recover from an initial 0.8% fall. The winners managed to outnumber the losers on the main board, but weakness in heavyweights CBA, BHP and CSL was enough to drag the index into negative territory, albeit just.
The local market kicked things off on the backfoot down ~60pts before it flipped the switch straight after the open and reversed most of the losses though couldn’t claw its way back to positive territory. Profit-taking in gold stocks and weakness in healthcare kept the ASX in the red despite strength across lithium names.
The S&P 500 has surged more than 30% from its April lows, fuelled by expectations that the Fed will cut rates several times this year, with a 25-basis-point move widely seen as a certainty on Wednesday.
The ASX200 ended last week largely flat, holding September’s current pullback to 1.2%. It may have been a quiet week on the index level, but it wasn’t on the sector level, with solid gains by the rate-sensitive tech, real estate, and utilities sectors while the energy sector fell 4.5% as OPEC+ maintained its elevated supply. It was disappointing to see the local index drift while US indices punched higher, although a number of majors trading ex-dividend did weigh locally. The heavyweight miners slipped slightly after mining giants Anglo American / Teck Resources agreed to merge, forming a ~$53 billion copper powerhouse.
The ASX had a solid end to the week, with a broad-based rally following on from Wall Street’s record-setting session overnight. Expectations that the Fed will move on rate cuts as soon as next week helped fuel gains in financials and miners, while gold continued its charge toward fresh highs, offsetting weakness across the energy names.
