The Australian stock exchange has edged lower ahead of a key Federal Reserve meeting, where the US central bank is widely expected to raise interest rates for the second time since 2018.
The benchmark S&P/ASX200 index faded in the afternoon to close down 11.5 points, or 0.16 per cent, to 7,304.7.
The broader All Ordinaries finished on Wednesday down 22.8 points, or 0.3 per cent, to 7,564.8.
“I think the challenge for local investors is that we are right ahead of a potential in the market environment,” said Tiger Brokers chief strategy officer Michael McCarthy, referring to the Fed meeting.
For traders, it’s a fascinating time because the likelihood of a half percentage point rate hike has been clearly communicated, McCarthy said.
The market will be more focused on what signals the Fed sends on future rate hikes.
“Have we factored this all in and we’ll see a sell-the-fact response? I don’t know,” said McCarthy, adding he expects volatile trading following the Fed’s announcement early on Thursday, Australian time.
The market’s 11 official sectors were mixed on Wednesday, with six losing ground and five gaining it.
Energy companies were the biggest gainers, collectively rising 0.8 per cent as natural gas prices hit their highest level since September 2008,
Prices were pushed up by the possibility of more European Union sanctions against Russian gas, as well as Moscow last week cutting off shipments to Poland and Bulgaria.
Santos was up 1.1 per cent and Viva Energy Group rose 1.8 per cent, although Woodside dipped 0.1 per cent.
Financials were up 0.7 per cent, with all four of the big banks advancing after lifting their variable rate loans following Tuesday’s hike in the cash rate.
NAB rose 1.0 per cent to $32.44, Westpac gained 0.7 per cent to $24.07, and CBA advanced 0.7 per cent to $102.98.
ANZ added 0.4 per cent to $27.38 after announcing cash profit from continuing operations for the six months ending March 31 rose four per cent to $3.1 billion, slightly ahead of analyst estimates.
JB Hi-Fi dropped 4.7 per cent to $49.73 after the electronics retailer declined to offer full-year sales and earnings guidance.
JB Hi-Fi said it was experiencing strong sales growth but couldn’t be sure of stock availability given local and global uncertainties heading into the important end-of-financial year trading period.
ARB Corporation fell 11.2 per cent to a more than one-year low of $33.61.
That came despite the automotive accessory company saying it had a positive outlook in the face of key challenges such as staffing and vehicle shortages, as well as supply chains and shipping network disruptions.
Flight Centre fell 6.7 per cent to a one-month low of $21.19 after forecasting a full-year loss of between $195 million and $225 million. However, the travel company said it was profitable in March and had strong momentum globally.
Temple & Webster dropped 7.0 per cent to a nearly two-year low of $5.02 despite the online furniture retailer announcing revenue was up 23 per cent for the first four months of 2022, versus the same period last year.
The heavyweight mining sector fell 0.9, with BHP dropping 0.6 per cent to $47.40, Rio Tinto down 0.7 per cent to $111.11 and Fortescue Metals down 2.4 per cent to $20.12.
AVZ Minerals fell 19.2 to a two-month low of 80 cents after its subsidiary received a mining license for its Manono lithium and tin project in the Congo.
AVZ’s managing director called it a “watershed moment” for the Perth-based company, but traders had apparently “bought the rumour, sold the news”.
Property trusts were again the biggest losers, collectively falling 1.5 per cent as higher interest rates make the sector less attractive. Goodman Group dropped 2.4 per cent and Mirvac fell 3.0 per cent.
Nine rose 0.8 per cent to $2.59 after announcing net profit for the six months to December was up 20 per cent to $213 million.
Chief executive Mike Sneesby said the increasingly diversified media company has had a strong start to calendar 2022 across all its platforms.
The Aussie dollar was buying 71.14 US cents, from 70.88 cents at the close of the market on Tuesday.
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ON THE ASX:
* The benchmark S&P/ASX200 index finished down 11.5 points, or 0.16 per cent, to close at 7,304.7 on Wednesday.
* The All Ordinaries index dropped 22.8 points, or 0.3 per cent, to 7,564.8.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 71.14 US cents, from 70.88 US cents when the ASX closed on Wednesday
* 92.57 Japanese yen, from 92.31 yen
* 67.58 Euro cents, from 67.51 cents
* 56.90 British pence, from 56.65 pence
* 110.59 NZ cents, from 110.41 NZ cents.
Derek Rose
(Australian Associated Press)