ASX edges lower before Fed meeting: Wednesday 29 July

Derek Rose
(Australian Associated Press)

 

The Australian share market has closed lower as investors wait for a crucial meeting of the US Federal Reserve.

After climbing as much as 0.5 per cent in early trading on the back of gains in banking stocks, the benchmark S&P/ASX200 index finished Wednesday down 14.1 points, or 0.23 per cent lower, at 6,006.4 points.

The All Ordinaries index was dropped by 18.8 points, or 0.31 per cent, at 6,128.

Traders were waiting for an announcement from the US central bank on interest rates, due to take place in the early hours of Thursday, Australian time.

“This could be the most crucial Fed meeting they’ve had since the new regime came in,” IC Markets general manager Nick Twidale said.

“Obviously, there’s a lot of dovishness priced in.”

But if the Fed is not quite as dovish as expected on interest rates, “there could be a real sharp correction”.

Indices lost ground on Wednesday after Queensland announced it was locking out people from Greater Sydney after declaring it a COVID-19 hotspot.

But banking stocks continued to do well after the Australian Prudential Regulation Authority eased restrictions on dividends introduced in April amid the economic impact of the coronavirus-related lockdowns.

APRA said banks and insurers should still keep their dividend payout ratios below 50 per cent for the remainder of 2020.

CBA gained 1.1 per cent to $73.01, ANZ rose 2.1 per cent to $18.45, NAB advanced 1.6 per cent to $18.18 and Westpac added 1.4 per cent to $17.70.

After the market closed, mining giant Rio Tinto declared a $2.1647 per share interim dividend, up 3.0 per cent from last year, despite a 20 per cent drop in first-half net earnings.

Shares in the diversified miner closed down 0.7 per cent to $103.35, while BHP dropped 2.0 per cent to $37.30 and Fortescue Metals fell 0.2 per cent to $16.85.

Goldminers were generally lower even as the price of the precious metal hovered around $US1,957, close to its record high.

Newcrest dropped 0.8 per cent, Northern Star fell 2.8 per cent and Saracen Mineral Holdings drooped 1.8 per cent, although Evolution gained 0.8 per cent.

Elsewhere, supermarket Coles gained 1.9 per cent to $18.18, close to its record high.

Tech stocks were lower, collectively losing 1.6 per cent, as Afterpay fell 1.2 per cent to $67.77 and Xero dropped 2.0 per cent to $90.65.

Oil producers Woodside, Santos, Oil Search and Beach Energy were all down between 1.3 and 2.0 per cent after oil prices fell overnight.

Downer EDI dropped 1.9 per cent to $4.14 despite the industrial services provider being awarded $324 million in contracts with the likes of BHP, Santos and Wesfarmers across the electricity, oil, gas and industrial sectors.

Shares in Dreamworld’s parent company Ardent Leisure were flat at 35.5 cents after the company said it would plead guilty to charges over the 2016 fatal Thunder River Rapids ride tragedy that killed four people.

The Australian dollar was trading about a 15-month high of 71.74 US cents, up from 71.30 US cents at Tuesday’s close.

ON THE ASX

* The benchmark S&P/ASX200 index on Wednesday closed down 14.1 points, or 0.23 per cent, at 6,006.4 points

* The All Ordinaries closed down 18.8 points, or 0.31 per cent, at 6,128 points

* At 1733 AEST, the SPI200 futures index was up five points, or 0.07 per cent, at 5,979 points

CURRENCY SNAPSHOT

One Australian dollar buys:

* 71.74 US cents, from 71.30 US cents on Tuesday

* 75.30 Japanese yen, from 75.20 yen

* 61.06 euro cents, from 60.79 cents

* 55.46 British pence, from 55.43 pence

* 107.66 NZ cents, from 107.25 cents.

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