Sydney market commenced trading with firm footing as appetite for riskier assets underpinned after New York Fed President John Williams said on Thursday that policymakers need to add stimulus early to deal with too-low inflation when interest rates are near zero and cannot wait for economic disaster to unfold, in a speech read as a strong argument in favour of quick action. The comments by Williams made it a virtual certainty the Fed would opt to cut interest rates by 25 basis points (bps) at its July 30-31 policy meeting and also fuelled expectations of an even deeper 50 bp reduction.
The dovish Fed expectations are helping markets stay in the green despite tensions in the Middle East. The US President Donald Trump said on Thursday that an American Navy ship had destroyed an Iranian done in a “defensive action.” The announcement came hours after Iranian forces seized a foreign tanker it accused of smuggling oil.
Western Areas firmed 20.2% to A$2.44 after its June quarter results on Thursday met all production and cost guidance metrics for 2018-19. It also said in the event of a successful acquisition of Kidman Resources by Wesfarmers, it would receive $33.1 million for its 17.4 million Kidman shares.
Ship builder and defence contractor Austal rose 17.3% to A$4.13 after it announced it expected 2019-20 earnings before interest and tax to be at least 14% higher than 2018-19.
Woodside Petroleum shares slid 6.2per cent to A$33.60 after it reported weak second quarter production and sales due to major maintenance work at its Pluto LNG plant. Sales were 40% lower in for the quarter than they were in the previous six months while production was 20% weaker.
CURRENCY NEWS: The Australian dollar rose as dovish comments by Fed officials saw renewed expectations that the Fed may cut by 0.5% this month rather than 0.25%. The Australian dollar changed hands at $0.7071 after rising from levels below $0.704 yesterday.
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