The ASX Today

After weakening on the Federal Reserve announcement, US markets then ticked up higher, although the ASX isn't appearing to have caught the wind.

ASX SPI 200 Futures were down more than 20 points following the Fed news early this morning, however at 8am AEST the index was showing the local market was likely to open flat. It was up just four points to 5715 points. 

The Fed didn't change rates although it did announce the start of its balance sheet tapering.

The S&P 500 managed to close relatively flat, the Dow gained 41 points, 0.2 per cent, to 22,412 points. The tech-tilted Nasdaq dipped marginally to 6456 points. In the immediate aftermath of the Fed decision, stocks moved lower, and some analysts think this made it clear that equities traders expected the Fed to move sooner.

The Australian dollar cracked US81c overnight but this morning is back at US80.18c. That's still 0.1 per cent higher day-on-day.

KEY POINTS

• RBA Governor Philip Lowe will deliver a speech titled ‘The New Chapter'
• Detailed labour market data for August to be released locally
• Aussie dollar flies then returns back to Earth, now buys around US80.18c
• US stocks gyrate then eke out gains overnight 
• Oil rallies on news from Iraq, but local producers look unlikely to move higher this morning
• Special commentary below: The US Federal Reserve keeps rates on hold                                               

Global oil prices rose by around 2 per cent overnight after Iraq signalled a possible extension of the agreement between OPEC and non-OPEC oil producers to limit oil supply and support prices. Brent crude rose by $US1.15 or 2.1 per cent to $US56.29 a barrel. Considering currency exposure, this may not translate to gains for BHP or Rio Tinto, which are showing they are likely to open a way lower. 

The Fed appeared to help move the gold price up and away from a technical support level of $US1294/95 overnight. Spot gold at 8am AEST was at $US1301 a tonne and gold futures were priced at $US1316.

The Aussie dollar also caught a decent bid in anticipation of the Fed meeting, but then abated back to around the US80c-level. It's still 0.1 per cent higher day-on-day. Meanwhile, copper barely moved at $US2.94 a pound.

Bullish sentiment has been driving equities for some time in the US. The Fed's announcement came attached with positive commentary around economic growth, but this wasn't enough to move indices drastically higher, potentially because this has already been priced in.

AxiTrader chief market strategist Greg McKenna comments we will need to see “improving data – better than expected – for the market to aggressively re-price”.

CommSec chief economist Craig James noted while “share markets gyrated” on the Fed decision, they then moved higher, and for investors everywhere the decision “is another sigh of relief”.

CommSec expects the Reserve Bank to start lifting rates late in 2018 but it all depends on conditions in housing and job markets and on wage and price growth. ANZ is being more explicit, calling for higher rates in 2018 as well, with the major bank penciling in two rate hikes next year based on an improving economy.

RBA Assistant Governor Luci Ellis spoke to that point yesterday: “There seems a reasonable prospect that – as long as nothing really bad happens – this global expansion could continue for a while”.

But the local market still finished an inch lower than where it started yesterday.