US Fed holds rates steady, fuels Australian market rallies and triggers key stock activities

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US Fed holds rates steady, fuels Australian market rallies and triggers key stock activities
Credit: © Reuters.

In response to the US Federal Reserve's decision to maintain current interest rates, both the Australian sharemarket and Wall Street have experienced gains. Sectors sensitive to interest rates on the Australian Securities Exchange (ASX) have rallied, mirroring trends seen on Wall Street. Indices such as S&P/ASX 200 and currencies including the Australian dollar are enjoying a positive trajectory.

Despite indications from Fed Chairman Jerome Powell suggesting potential future rate hikes, traders have displayed skepticism, evident in the lower yield of the US 10-year note. This cautious sentiment has sparked speculation about a peak in US interest rates.

On the ASX, notable stock activity was observed in companies such as Origin Energy, Pacific Current, Janus Henderson, CSR, and Sayona Mining. Origin Energy reported an updated A$18.7 billion takeover bid from a consortium led by Brookfield and EIG. Pacific Current received a reaffirmed offer of A$11 per share from GQG Partners. Janus Henderson announced plans to delist from the ASX due to only 5.5% of its issued capital being traded locally.

CSR's building products segment saw an 18% increase in earnings. Sayona Mining revealed new lithium reserves at its North American Lithium operation in Canada.

The unchanged interest rates also led to rallies in US equity markets and positive indications from other indices including Dow Jones , S&P 500 , Nasdaq , SPI futures. Asian markets such as Japan's Nikkei , Hong Kong's Hang Seng , and China's Shanghai Composite also showed encouraging signs.

In terms of sector performance, the Information Technology sector and stocks like Mercury NZ (ASX:MCY), James Hardie Industries plc (ASX:NYSE: JHX ), and REA Group (ASX:REA) outperformed. Conversely, Utilities and stocks like Origin Energy (ASX:ORG), Santos (ASX:STO), and Amcor (NYSE: AMCR ) plc (ASX:AMC) underperformed.

A revised cash consideration of A$9.53 per share was announced by Origin Energy from the Brookfield-led consortium and EIG, surpassing the Independent Expert’s 30 June 2023 valuation. Sunstone Metals (ASX:STM) reported growth in its Limon gold-silver discovery surrounding the Central Shoot. Chimeric Therapeutics (ASX:CHM) dosed the first patient in their Phase 1B brain cancer clinical trial following positive Phase 1A clinical data.

Commodity prices also reflected market optimism. Gold traded at $1,993.80 an ounce, iron ore rose by 1.8%, light crude traded higher at US$81.31 a barrel, and the Australian dollar bought 64.26 US cents.

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