ASX retreats after yesterday's gains
A short-squeeze rally yesterday triggered by the US Federal Reserve unwound on the Australian sharemarket today as investors digested the Fed's perennial over-optimism and uncertain Chinese outlook amid rising oil prices.
The S&P/ASX 200 index was down 0.4 per cent down until the afternoon but slipped further to close 48.7 points, or 0.89 per cent, at 5419.5 with losses across the board, despite firmer iron ore and metals prices.
After the initial knee-jerk reactions across financial markets yesterday morning momentum faded last night as investors, strategists and economists struggled to come to terms with the Fed's optimistic growth forecasts and benign inflation outlook and what they meant for bubbling asset prices.
The action in precious metals was the biggest talking point as gold surge 3.7 per cent to $US1315 an ounce and silver soared 4.6 per cent to $US20.90 an ounce.
"It was yet another very strange night for asset markets around the world," Westpac strategist Graeme Jarvis said. "There were a whole bunch of idiosyncratic chapters that really did not combine together to give us a cohesive story. Europe dodged one way, the US darted another, and (currency) markets tried to tell the same story as precious metals."
Global benchmark US 10-year yields initially fell 3 points before reversing 7 points to 2.64 per cent, unchanged from before the Fed meeting, but they dropped to 2.61 per cent today, ensuring Australian 10-years were flat at 3.672 per cent.
Brent crude oil climbed 0.7 per cent to a fresh eight-month high of $US115.50 a barrel
The Australian dollar was steady at US94.05¢ after retreating from a high of US94.35¢.
The Shanghai composite index was off 0.3 per cent at the close of the ASX as concerns over buyer dilution from a spate of initial public offerings compounded property market jitters.
In Tokyo the Nikkei index was flat.
Spot iron ore rose 0.4 per cent to $US90.70 a tonne yesterday, Dalian iron ore futures were up 1.2 per cent today, copper rose 0.3 per cent to $US a tonne.
More to come…
