Fed cut helps equities rally

James Gerrish

Market Matters

The market bolted out of the gate this morning with the finance names pushing the index into a 6-week high early in the day. By 1 pm the sellers found their grove and the rally was threatened however this was flushed out before 2pm and the rally resumed. The push higher was motivated by the US Fed which cut rates again overnight driving a risk on sentiment from investors. Commentary from Jerome Powell suggests another cut is still left in the tank, however he focussed on positive US economic data pushing the rhetoric that all was fine at home and the central bank was close to the end of their cutting cycle.

Locally employment data was out mid-morning which was disappointing. 34,000 jobs were added in August, but full time positions actually fell suggesting the economy is becoming more and more underemployed. The unemployment rate was higher to 5.3%, but this was a result of the participation rate increasing as long term unemployed look for work. The data forced the Aussie dollar to fall, dropping back below the 68USc level again soon after the announcement.

Energy continued its pullback from the spikes as a result of the attack on Aramco earlier in the week. Materials were also lower, however the bulk of the move came from the gold stocks where the rest of the commodities were mostly unchanged. Telcos led thanks to sector heavyweight Telstra.

Overall, the ASX 200 gained 35pts today or +0.54% to 6717, Dow Futures are now trading down -63pts/-0.23%.

ASX 200 Chart

ASX 200 Chart

CATCHING OUR EYE;

Broker Moves;

  • BPT AU: Beach Energy Cut to Neutral at JPMorgan; Price Target A$2.55
  • CTD AU: Corporate Travel Rated New Underperform at RBC; PT A$17

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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