Banks and miners make up more than half the ASX, meaning their movements – even if minor – can steer the direction of the wider market.
Retailers also traded lower. Wesfarmers, the owner of Bunnings and Officeworks, fell 1.9 per cent and Harvey Norman lost 2 per cent. Their landlords also declined, with shopping centre owners Scentre, Stockland and Vicinity down 2.2 per cent, 2.5 per cent and 3.5 per cent, respectively.
The lifters
Meanwhile, energy stocks powered ahead. Oil and gas giant Woodside rose 1.3 per cent and Ampol, the nation’s biggest refiner, added 0.6 per cent after oil prices steadied, following a three-day gain as traders assess the fallout from Ukrainian attacks on Russian crude infrastructure.
Coal miners rose for a second day, with Yancoal rising 2.4 per cent and Whitehaven Coal jumping 5.2 per cent. New Hope Corp more than wiped out Tuesday’s 5.1 per cent gain following its results, slumping 8.3 per cent. China said this week it churned out less coal in August as the government tightened controls on production.
Super Retail Group, which owns the Rebel Sport and Supercheap Auto chains, rose 2.7 per cent, bouncing back from its 4.3 per cent loss on Tuesday when it sacked its chief executive, Anthony Heraghty, for misleading the board about an alleged relationship that has plunged the company into the middle of a messy multimillion-dollar legal battle.
The lowdown
Caution has set in on markets as investors await a widely tipped Federal Reserve interest rate cut tonight, in what would be the first reduction in borrowing costs in the world’s biggest economy this year.
The sell-down on the local bourse has largely wiped out Tuesday’s gains, and came after a weak session on Wall Street overnight, where traders went into standby mode ahead of the rate decision.
“Global attention is fixed on the [Fed] announcement at 4am AEST, with markets fully pricing in a 25 basis-point rate cut — the first reduction since December,” Moomoo dealing manager Jimmy Tran said.
Josh Gilbert, a market analyst at eToro in Sydney, said markets were in a holding pattern ahead of the US central bank’s decision, with the “biggest risk [being] that the Fed sounds less dovish than markets are hoping for”.
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Money markets are fully pricing in a quarter-point rate cut, and a series of more cuts over the next year. An outlook by the central bank echoing that view would be an encouraging sign for stock bulls, who have largely banked on a gradual easing path that keeps the US economy from sliding into a recession.
“The market is looking for 25 basis points and another 25 basis points into the year-end,” said Stephanie Leung, chief investment officer at StashAway on Bloomberg TV.
Investors will also look for changes in the latest quarterly rates projections, known as the dot plot, and pore over Fed chair Jerome Powell’s remarks when he announces the rate decision. The “real interest” will lie in how many members join Trump’s former economic adviser and now Fed board member Stephen Miran in pushing for a 50-basis-point cut, wrote Tony Sycamore, a market strategist at IG Australia.
On Wall Street overnight, US stocks edged back ahead of the rate cut decision. The S&P 500 fell 0.1 per cent from its latest all-time high. The Dow Jones dipped 125 points, or 0.3 per cent, while the Nasdaq composite slipped 0.1 per cent from its own record set the day before.
Stocks have run to records on expectations that the Fed will announce the first of a series of cuts to rates on Wednesday in hopes of giving the economy a boost. The job market has slowed so much that traders believe Fed officials now see it as the bigger danger for the economy than the threat of higher inflation because of President Donald Trump’s tariffs.
The Fed has been holding off on cuts to rates because inflation has remained above its 2 per cent target, and easier interest rates could give it more fuel.
Meanwhile, Trump on Tuesday announced an agreement between the US and China to keep TikTok operating in the US, potentially resolving a saga that has lingered for nearly a year.
The US and China have reached an agreement on TikTok.Credit: AP
“We have a deal on TikTok… We have a group of very big companies that want to buy it,” Trump said at a White House briefing, without providing further details. The announcement comes a day before a September 17 deadline to sell or shut down the short video app.
New York Times shares fell 1.6 per cent after Trump filed a $US15 billion ($22.5 billion) defamation lawsuit against the newspaper and four of its journalists on Monday.
With AP, Bloomberg
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
