Market drifts ahead of Fed decision on stimulus program
The benchmark S&P/ASX 200 Index dipped 6.2 points, or 0.1 per cent, to 5097, while the All Ordinaries slipped 6.8 points to 5099.3.
The market got a weak lead after equity markets in the US and Europe fell before a decision by the Fed on reducing its $US85 billion in monthly asset purchases.
"Delaying the taper until March would be more cautious and appropriate," said Equity Trustees chief investment officer George Boubouras. "However, it is very clear the taper will begin soon and that markets have started to price this in.
"If the Fed does start the long process of withdrawing artificial liquidity this month, the key risk is a sharp spike in long-dated US bond yields."
Telecoms was the best-performing sector on Wednesday, as Telstra rose 0.4 per cent to $5.04.
Utilities stocks were broadly higher following the release of the Australian Energy Regulator's final rate of return guidelines, which were largely unchanged from the draft released in August.
In the Reserve Bank's semi-annual testimony to Parliament, governor Glenn Stevens told politicians that "monetary policy can't force spending to occur" and repeated his assertion the currency must depreciate.
At the local close, the dollar was buying US89.04¢, down from US89.41¢ at the previous close.
The big four banks were mixed. ANZ added 0.7 per cent to $30.70. Addressing the bank's annual meeting, chairman John Morschel said the outlook for the world economy was becoming more settled but risks remain. As expected, David Gonski was appointed as the next chairman of the board. National Australia Bank edged 1¢ higher at $33.41. Commonwealth Bank fell 0.3 per cent to $73.68, while Westpac dropped 0.8 per cent to $30.62.
QBE Insurance Group reclaimed 2.3 per cent to $10.39.
The big metals and mining stocks were higher, despite weaker commodity prices. BHP Billiton rose 0.4 per cent at $35.79, while Rio Tinto added 3¢ to $65.33.
Online travel company Wotif fell 31.8 per cent to $2.85, after it warned first-half annual profit would fall by up to 20 per cent and said the second-half outlook was also soft.
Frequently Asked Questions about this Article…
The US Federal Reserve is deciding whether to begin tapering its monetary stimulus program, which involves reducing its $85 billion in monthly asset purchases. This decision is closely watched by investors as it can impact market dynamics.
Ahead of the Fed's decision, the S&P/ASX 200 Index dipped slightly by 6.2 points, or 0.1 percent, to 5097, indicating a cautious market sentiment.
The telecoms sector was the best-performing sector on Wednesday, with Telstra rising 0.4 percent to $5.04.
Utilities stocks were broadly higher following the release of the Australian Energy Regulator's final rate of return guidelines, which were largely unchanged from the draft released in August.
The big four banks showed mixed performance. ANZ added 0.7 percent, National Australia Bank edged 1 cent higher, Commonwealth Bank fell 0.3 percent, and Westpac dropped 0.8 percent.
Wotif's shares fell significantly by 31.8 percent to $2.85 after the company warned that its first-half annual profit would fall by up to 20 percent, with a soft outlook for the second half as well.
At the local close, the Australian dollar was buying US89.04 cents, down from US89.41 cents at the previous close, reflecting a slight depreciation.
If the Fed begins tapering its stimulus program, a key risk is a sharp spike in long-dated US bond yields, which could affect market stability.
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