Australian shares rose slightly today on hopes the Federal Reserve will announce more stimulus measures for the struggling US economy, while locally News Ltd surprised with a takeover bid for ConsMedia.
The benchmark S&P/ASX200 index rose 9.1 points, or 0.2 per cent, to 4132.4, while the broader All Ordinaries index added 9.4 points, or 0.2 per cent, to 4176.8.
The major sectors ended mainly higher, with financials rising 0.8 per cent, energy up 0.7 per cent and materials inching 0.2 per cent higher. But gold fell 1.5 per cent and consumer staples lost 0.9 per cent.
The Australian dollar was buying $US1.0195 in late trade, near a six-week high of $US1.0203 struck earlier in the morning.
Caution ahead of Fed decision
The sharemarket curtailed its enthusiasm in afternoon trade, with traders being mindful of not setting themselves up too much for a fall should the Fed disappoint the market with inaction.
CommSec economist Savanth Sebastian said investors were cautious ahead of the US Federal Reserve Open Markets Committee (FOMC) two-day meeting that ends overnight.
‘‘They seem to be a bit more circumspect,’’ Mr Sebastian said. ‘‘Investors are just unsure with all of the volatility on the global markets.
‘‘The drivers behind global equities at the moment seem to be speculation and hopes of stimulus (in the US) rather than any concrete shift in parameters.’’
ConsMedia jumps on bid
James Packer's Consolidated Media Holding was one of the biggest winners of the day, jumping nearly 10 per cent on the back of News Ltd's $2 billion takeover offer for the company.
Consolidated Media shares closed 30 cents, or 9.7 per cent, higher at $3.38.
The phrase 'spit the dummy' could be given new meaning if the FOMC statement is devoid of easing measures.
News Corp, which also announced a restructure of its local operations to prepare for a digital future, was 11 cents, or 0.6 per cent, higher at $20.15, and its non-voting stock lifted 13 cents to $19.90.
Casinos operator Echo Entertainment, in which Mr Packer holds a stake of 10 per cent, ended 3 cents higher at $4.28.
Elsewhere in the media sector, Fairfax was 0.5 cents lower at 59 cents, while Seven Media fell 1 per cent to $2.03 and Ten Network ended flat at 51.5 cents.
In the resources sector, BHP Billiton was 11 cents, or 0.3 per cent, richer at $32.60, while Rio Tinto found 95 cents, or 1.7 per cent, to $57.72, after it said had committed $US3.7 billion to expanding its massive iron ore operations in Western Australia’s Pilbara region.
Grocery wholesaler Metcash plans to take its competitive push against the supermarket giants into the hardware sector by taking full control of the Mitre 10 brand. It closed 15 cents lower at $3.82.
Among the major banks, National Australia Bank added 50 cents to $23.45, Westpac improved 40 cents to $21.20, ANZ picked up 7 cents at $21.75, and Commonwealth Bank rose 50 cents to $52.09.
National turnover was 1.87 billion shares worth $5.5 billion, with 487 stocks up, 505 down and 400 unchanged.
Betting on another Twist
Many economists say that if the Fed announces any new step this week, the most likely would be to extend a program called Operation Twist, where it sells shorter-term securities and buys longer-term bonds.
The goal is to further reduce long-term interest rates to encourage borrowing and spending.
The mood of financial markets swung into more favourable territory today, but the large dependence on the FOMC to '‘come to the party'’ with more monetary easing adds a sizeable layer of fragility to the recent rebound, said CMC Markets senior trader Tim Waterer.
"When the FOMC announce their game plan going forward for the economy, it is the US dollar reaction to this that will set the tone for the broader market, with the likes of gold, oil and the Euro all set to take their cues from the directional move in the dollar," he said.
Mr Waterer said most regional sharemarkets rose today on bets the FOMC would deliver the goods with stimulus measures.
"While traders want to be ‘on board’ should the market take off in coming days on any FOMC action, the downside risk should not be ignored in case the committee does not give the market the quantitative easing which it so openly desires," he said.
"The phrase '‘spit the dummy’' could be given new meaning if the FOMC statement is devoid of easing measures."
BusinessDay with agencies