Australian share prices are tipped to open slightly higher on Wednesday in the wake of a positive night in New York.
The ASX 200 is expected to firm by 0.12% when the Australian Securities Exchange (ASX) opens at 10:00 am AEDT (11:00 pm GMT Tuesday) with the March futures contract last quoted 11 points over the prior settlement at 8,619 points at the time of writing.
The catalyst for the anticipated firmer index start was a stronger session on Wall Street, where stock prices ended higher on Tuesday (Wednesday AEDT) as travel companies rose while the Federal Reserve began its two-day policy meeting.
The Dow Jones Industrial Average edged up by just 0.1%, the S&P 500 added 0.3%, while the Nasdaq Composite put on 0.5% as concerns about high oil prices and the United States and Israel war with Iran dominated investor attention.
No change in monetary policy is expected from the U.S. central bank’s meeting when it announces its decision on Wednesday, with futures markets factoring in a 25-basis-point cut toward the end of the year.
"The place where we could get in trouble with this is if the Fed views the oil shock as inflationary and decides to respond with more hawkish monetary policy," Baird Private Wealth Management Investment Strategist Ross Mayfield was quoted by Reuters as saying in this article.
Shares of airlines and travel companies rebounded from recent losses caused by the U.S. and Israeli attack on Iran and surging energy prices, while oil prices rose overnight.
The Australian sharemarket had finished up on Tuesday after the Reserve Bank of Australia lifted the official cash interest rate by 25 basis points to 4.1% in a split decision, with the benchmark index adding 0.4% to 8,614.3 points.
CommSec Equity Market Strategist James Gruber said the market was relatively sanguine about the RBA decision, with the ASX rising in the wake of it, particularly as the odds of another increase in May had fallen, based on money market swaps.
He said travel and energy stocks may rise on the ASX today as a result of overnight developments.
“It may evolve a little bit as the day goes along as you get more economists forecasts come out about what’s going to happen in May,” Gruber said.
In fixed interest markets, Australian Government bonds dropped with two-year rates down by 0.42% to 4.495% and 10 year rates off by 0.06% to 4.898% at the time of writing.
