The Australian sharemarket opened stronger on Wednesday, powered by mining heavyweights BHP and Rio Tinto, despite a lacklustre session on Wall Street.
The Australian sharemarket opened stronger on Wednesday, powered by mining heavyweights BHP and Rio Tinto, despite a lacklustre session on Wall Street, where stocks closed mostly flat ahead of an update on inflation in the world’s largest economy.
Despite gains by Meridian, the utilities sector was the weakest in the pack, with Origin Energy shedding 0.1 per cent. The energy sector traded flat as coal miners Whitehaven and New Hope both dropped. A reading that’s higher than expected would likely bolster traders’ expectations that the Fed will raise rates by another quarter of a percentage point at its next meeting in May. Higher rates can undercut inflation, but they also raise the risk of a recession later on and hurt prices for stocks and other investments.
“[The] stock market wants a softer print as a hot reading will add more confusion/uncertainty into the equation of what the Fed does from here,” the veteran trader wrote. “Another hike in May but then aggressive cuts in Q4 [the December quarter]? This is what Fed fund futures are pricing in ahead of tomorrow’s print.”
If they do cut off lending to businesses, that could further slow the economy and raise the risk of a recession.
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