After reaching new all-time highs during the Monday trading session, Wall Street’s two main indexes – the S&P 500 and the Dow closed at record levels for yet another day.
But after the solid day on the Australian market yesterday with the ASX 200 up 0.4% or 25 points, the overnight ASX futures market with a gain of only 7 points – meaning the start today will be more subdued than expected after the strong finish on Wall Street this morning.
Analysts say the markets are now focused on the Fed meeting starting tonight, our time and the post meeting statement early Thursday that is expected to confirm the Fed will start unwinding its huge quantitative easing by shrinking its balance sheet which will be an effective tightening of monetary policy.
As well investors are looking to the meeting to provide a stronger guide for the next rate rise – expected by the end of the year.
The S&P 500 ended the day 0.15% higher at 2,503.87 thanks in part to a rally in bank stocks on the prospect of higher rates – that offset a fall in interest rate-sensitive utilities (which like lower rates).
The Dow rose 0.3% 0.3 per cent to close at a record 22,331.35 having hit an all-time high of 22,355.62 earlier in the day.
But the tech heavy Nasdaq Composite, which had hit an all-time high of 6,477.77 earlier in the day trimmed those gains add finished the day just 0.1% higher at 6,454,64 and short of a record close.
Gold again fell – down 1.2% to $US1,309 an ounce, while West Texas Intermediate oil futures (WTI) oil futures jumped to a touch under $US50 a barrel in New York.
WTI settled 2 cents higher at $US49.91 a barrel in New York — its highest level since July 31. In London, Brent crude, its global counterpart, slid 0.3% or to $US55.48 a barrel.
Oil prices had been in the red for much of the day — with WTI down as much as 1.4% — on the back of strength in the US dollar which in turn saw the Aussie dollar back under 80 US cents.
Local investors will have to contend with the fall in gold, the lower dollar and another dip in the spot iron ore price to $US71.76 a tonne – down 37 cents according to the Metal Bulletin.
Analysts say that US investors are starting to believe that the oil market has again turned up.
So since hitting a low on August 17, the S&P 500 energy sector has risen nearly 8% and is the best performing sector so far this month.
Brent Crude — the international benchmark — has risen over 22$ since hitting its low for the year on June 21.
The S&P 500 hit 2,500 for the first time on Friday and the Dow had its best week of gains for the year as well.
Last week, the S&P 500 had weekly gains of 1.6%, its best since the first week of January while the more narrower Dow jumped 2.2% for its best week since early last December.
