ASX Slips As Global Markets Gain
World stockmarkets were mostly higher last week - Australia was the prominent exception with a small 0.2% drop that was as much to do with the sell off in iron ore as any other factor.
Eurozone shares and the US S&P 500 rose 0.1% on Friday in relatively quiet trade in the wake of the Fed meeting and more dangerous nonsense from Donald Trump and North Korea.
The local market could see a small rise later today after the ASX 200 futures market ended 7 points higher early Saturday.
Despite that the ASX 200 is likely to again test of 7 month lows it nudged late last week - Saturday's close wasn’t very solid.
A further decline in the iron ore price of 3.8% on Friday taking its fall for the week to 11.9% will likely act as a drag on the big miners though, as will the weaker gold price.
Overall Japanese shares up 2.5%, Eurozone shares up 0.7%, Chinese shares up 0.2% and US shares up a mixed 0.1%.
Apart from oil, commodities again sold off, especially metals like nickel and copper - gold lost around 2% after the Fed laid out a series of four possible rate rises between now and the end of 2018, and revealed plans to start shrinking its huge $US4.5 trillion balance sheet.
Bond yields rose as global data remained solid and the Fed continued its process of monetary tightening. The $A fended lower after the greenback firmed on Friday - the currency ended well under 80 US cents.
On Wall Street the S&P 500 ended 0.1% higher for the week and on Friday to end at 2,502.22. The big negative was the 5% plus slide in the price of Apple shares last week on growing fears the iPhone 8 will not be as big a seller as thought and tech problems with the new Apple Watch.
The Fed’s decision also hit high value low yield dividend paying stocks like utilities and real estate companies, builders and investment trusts.
The Fed’s decision to leave another possible rate rise this year impacted interest rate sensitive sectors. Dividend paying sectors like utilities and real estate, which is also impacted by mortgage rates, were the biggest decliners, down about 2.8 per cent each.
Banks and financial though rose strongly in the aftermath of the Fed meeting, even though the outlook for big bank stocks is clouded.
The Dow rose 0.4% over the week to 22,349.59, while the Nasdaq dropped 0.3% to 6,426.92. Elsewhere, the dollar index, which measures the greenback against a basket of peers, rose 0.4% over the week.
In Australia the ASX 200 had its fourth week of losses in five, with the ASX around seven-month lows.
The benchmark ended the day up 26 points, or 0.5%, at 5,682.10 on Friday’s, trimming the weekly loss to 0.2%.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.