The S&P/ASX 200 climbed to close near the day's high, up 1.1% at 7175.20 on Wednesday and AUD/USD was trading back above US72c in the lead up to the FOMC meeting on US Federal Reserve monetary policy. US futures are bouncing around, in and out of the green and the red, while markets across Asia are higher. The NZX 50 closed up 0.6%.
The FOMC is meeting to decide US Federal Reserve monetary policy, with interest rates expected to begin rising by at least 25 basis points. US inflation is at a 40-year high and consumers are set to pay more for food. Russia’s invasion of Ukraine since 24 February has shut down ports and harvests will be affected by war activity. Russia and Ukraine together supply almost one-third of the world’s wheat, a quarter of its barley and nearly three-quarters of its sunflower oil, according to the International Food Policy Research Institute.
China tech stocks were looking at a short-term bounce, as dip buyers find prices attractive after the latest round of declines in the past few days. China’s internet stocks have fallen more in the past 13 months than US technology companies did during the dotcom bust of the early 2000s. Hong Kong listed Tencent has halved in value in 12 months and Alibaba’s share price is down by almost two-thirds.
The most recent falls came with increasing fear of further regulations, war in Ukraine and rising Covid numbers and restrictions in parts of Asia. The Hang Seng is trading at 7.4 times the next 12 month’s expected earnings, the lowest in 10 years, according to S&P Global Market Intelligence.
Crude surged above US$100 per barrel for the first time in years the day Russia invaded Ukraine, and prices continued to climb as the conflict intensified. WTI hit a high of US$130.50 a barrel early last week, while Brent traded as high as US$139.26 per barrel. This week has seen crude prices slip under US$100 a barrel, but ASX energy stocks including Santos and Woodside closed higher on Wednesday.
Airlines and travel-related companies rose on hopes a surge in travel demand will help offset fuel costs. New Zealand said it would reopen its border to Australians on April 12 and to other international travelers from May 1. On the ASX, Qantas, Flight Centre, Webjet, Corporate Travel Management and Air New Zealand all closed higher.
The Australian Federal Government announced a grants program to supercharge the country's battery materials and manufacturing sector. Australian Vanadium shares jumped 31% after it said it would receive a $49 million grant. Arafura Resources will receive $30 million to contribute to the construction of a $90.8 million rare earth separation plan at its Nolans project. The stock surged 20%. Alpha PH has been awarded a $45 million grant with shares up more than 20%.
AUD/USD at US72.13c
WTI currently US$97.51 a barrel
Brent crude oil US$102.12 a barrel
Spot gold US$1917.12