• Energy stocks led the ASX higher on Wednesday
  • Crude prices rallied another 2.5% overnight on Fed sentiment
  • US Federal Reserve to hand down interest rates decision later tonight

 

The ASX 200 added another 0.9% to its 1% gain yesterday as Energy stocks singlehandedly lifted the bourse on Wednesday.

The Energy sector surged by more than 4%, led by rallies in Woodside Energy (ASX:WDS) and Beach Energy (ASX:BPT) of 5% each, and Santos (ASX:STO) of 3.5%.

These stocks rose as crude prices rallied another 2.5% overnight on Fed sentiment, and Russia signalling that it will keep oil output at reduced levels.

Brent and WTI (the US oil price) are still at the lowest since 2021 as markets feared the banking crisis could morph into a recession.

The Fed is due to make its rates decision later tonight, with futures prices suggesting an 80% chance of another 25bp rate bump.

Nickel prices continued to fall overnight following revelations that fake nickel was discovered in the London Metal Exchange (LME) nickel contracts owned by JPMorgan Chase.

According to Bloomberg, the contracts turned out to be backed by bags of stones rather than nickel.

 

Fed Preview

Bond yields have been rising ahead of the all important Fed interest rates decision tonight.

But the question that everybody seems to be asking is whether or not the turmoil in the banking sector in the US and Europe will have wider implications for the broader US economy.

And if so, how would this affect the Fed’s decision?

“The feeling I have is that the Fed’s baseline scenario is to continue raising rates, especially in light of the ECB’s 50 basis point rate hike last week,” said Erik Weisman, Chief Economist and Portfolio Manager at MFS Investment Management.

Weisman also believes the actions the US Fed and Treasury undertook to backstop troubled regional banks should allow them to use the regulatory arm to safeguard the banking system.

“With all of this said, this is a highly uncertain and rapidly evolving situation.

“While the Fed and the Swiss National Bank have reacted quickly and forcefully, markets will still look for vulnerable targets and conditions could deteriorate, which could force the Fed to pause, at least temporarily, at its meeting this week.”

 

Elsewhere…

Elsewhere in the region, Asian shares also followed US equities higher on Wednesday.

Chinese EV maker Nio rose 7% in Hong Kong after the company said it was “very confident” of meeting the target of doubling sales to 250,000 electric vehicles this year.

Meanwhile Bloomberg reported that almost 800 US companies have shed 473,000 jobs this year.

The carnage extends far beyond technology, Bloomberg said, and in communications, financials, health care, real estate and energy sectors, the median layoffs were as big or bigger.

Back home, PM Albanese has been invited to attend the G7 summit in Japan in May, after missing out last year amid French President Emmanuel Macron’s rage over the AUKUS pact.

 

BIG CAP WINNERS

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Judo Corp (ASX:JDO) was the best performer today, up 7%.

 

BIG CAP LOSERS

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Latitude (ASX:LFS) dived 6% after coming back from trading halt following its cyber attack. The company gave an update, saying that it “uncovered further evidence of large-scale information theft affecting customers (past and present) and applicants across Australia and New Zealand.”

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