So what will Australian stockmarket today after another mixed day’s trading here yesterday and on Wall Street overnight, especially with the US Federal Reserve ruling out a June rate rise?
Up to the final hour this morning at 6 am, the Dow and the S&P 500 were on track for another record close as investors cheered the Fed’s caution.
But sentiment changed and both indexes eased lower toward the close.
Yesterday the local market started flat, then tipped lower, only to rebound as investors returned to bank stocks and the ASX 200 ended with small losses.
Like yesterday, local traders – who bid the share price futures contract higher overnight, so the market should start slightly higher – will have to deal with another fall in iron ore prices.
The price of iron ore fell for the seventh consecutive session overnight, with the price of ore delivered in China down 1% at $US57.80 a tonne, from its prior close of $US58.40 a tonne.
But it is still up from the 10-year low of $US46.70 hit in early April.
Other commodity prices enjoyed a small rise as the US dollar weakened a touch – but the Aussie dollar still traded under 79 US cents.
Gold was up a couple of dollars an ounce and oil prices were also higher, but only by a few cents a barrel despite a big fall in US oil stocks last week.
But the big influence will be the changed sentiment towards the timing of a rate rise by the Fed.
Fed members appeared to rule out a rate rise at next month’s meeting, the minutes read:
“Many participants, however, thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising (interest rates) had been satisfied …,”
Most analysts had already ruled out a June timing for a rate rise, so the next is the Fed’s September meeting.
The minutes from the April 28-29 meeting of the Open Markets committee also showed most officials expected the US economy to pick up after the first quarter slowdown.
But data since then has if anything, shown the rebound from that weak first quarter has been fitful and less than convincing, with retail sales weak and production falling. But housing starts have rebounded and the labour market seems to be solid.
Fed members revealed disappointment that falling oil prices did not spur consumer spending as much as had been hoped. They also were concerned about economic problems in China and Greece (which haven’t gone away).
Now investors will focus on a speech by Fed Chair Janet Yellen on Friday night, our time, for an updated view of the health of the US economy.
