ASX ends down, dollar up on Fed forecasts

·4-min read

Global investors on the ASX have offloaded shares as the Aussie dollar surged in the wake of the US Federal Reserve's optimistic projections for its economy, and better than expected Australian jobs figures.

The S&P/ASX200 benchmark index closed down 49.3 points, or 0.73 per cent, to 6745.9 on Thursday.

The All Ordinaries closed lower by 44.4 points, or 0.63 per cent, at 7003.6.

There were falls of more than one per cent in health, property, industrials, information technology and utilities.

The financial sector lost 0.89 per cent, while materials edged 0.1 per cent higher.

Earlier, US markets closed higher following the Federal Reserve's decision not to raise interest rates.

The central bank projected the US economy to grow by 6.5 per cent this year as the COVID-19 crisis eases, and the benefits of a $US1.9 trillion stimulus package take effect.

The promise of a thriving US economy had consequences for the Aussie dollar.

The dollar was buying 77.03 US cents seconds before the Fed comments at 0459 AEDT, then rose to 78.01 US cents in the next hour.

Nomura Australia senior economist Andrew Ticehurst said the Aussie dollar was growth-sensitive.

"Australia is a commodity exporter. Stronger growth means more demand for commodities and higher commodity prices," he said.

Yet he noted the US dollar fell due to the Fed's insistence it would not raise rates for years.

The rise in the Aussie dollar made shares more expensive for overseas investors, who limited their buying.

IG Markets analyst Kyle Rodda said the ASX was hit by a stronger Aussie dollar, and higher Aussie bond yields.

The Aussie dollar rose again, albeit on a smaller scale, after the February jobs figures.

The unemployment rate tumbled to 5.8 per cent after 88,700 people joined the workforce.

Economists expected a modest 30,000 increase in employment in February, and the jobless rate to have declined to 6.3 per cent from an originally reported 6.4 per cent in January.

On the ASX, investors rushed to gold miners following the drop in the US dollar.

Gold was trading at $US1750 per ounce, and there were gains of more than three per cent for Newcrest, Northern Star and Evolution.

Engineering group CIMIC said its CPB Contractors company signed a $289 million deal to upgrade part of the Bruce Highway in Queensland.

The Queensland government chose CPB, which earlier upgraded another section of highway for the Woondum to Curra stretch.

The new work is due in 2024.

Shares were down 1.17 per cent to $18.59.

Engineering group Monadelphous said it won a $150 million, five-year deal to provide maintain cranes for Fortescue Metals.

Monadelphous has since 2017 provided these services to the miner in the Pilbara region of Western Australia.

Shares were down 2.13 per cent to $11.01.

Westpac says it will sell its lenders mortgage insurance business and outsource the service.

Arch Capital will buy the business, which insures Westpac for home loans, and service the bank for 10 years.

Shares were lower by 0.93 per cent to $24.44.

ANZ was best of the banks and lost 0.81 per cent to $28.14.

In mining, BHP, Fortescue and Rio Tinto each lost less than one per cent.

On Friday, the Australian Bureau of Statistics will publish retail trade figures for February.

They are expected to show a 0.6 per cent increase in February, after 0.5 per cent growth in January.

The Australian dollar was buying 78.24 US cents at 1723 AEDT, higher from 77.30 US cents at Wednesday's close.


* The S&P/ASX200 benchmark index closed down 49.3 points, or 0.73 per cent, to 6745.9 on Thursday.

* The All Ordinaries closed lower by 44.4 points, or 0.63 per cent, at 7003.6.

* At 1723 AEDT, the SPI200 futures index was up by three points, or 0.04 per cent, and trading at 6715 points.


One Australian dollar buys:

* 78.24 US cents, from 77.30 cents on Tuesday

* 85.19 Japanese yen, from 84.40 yen

* 65.37 Euro cents, from 64.98 cents

* 56.04 British pence, from 55.66 pence

* 107.95 NZ cents, from 107.70 cents.