Australian shares end off record high ahead of Fed rate decision

Australian shares ended flat on Wednesday (Sep 18) after hitting a record high, as a fall in miners offset gains in financials, while investors assessed the odds of a likely super-sized rate cut by the Federal Reserve.

The S&P/ASX 200 index closed at 8,142.1 points, after touching a record high of 8,153.50 points early in the session.

“There’s a lot of caution in the lead up (to the Fed decision),” Tony Sycamore, a market analyst at IG Australia, said.

The Federal Reserve is expected to make its first interest rate cut in more than four years at the end of its two-day policy meeting on Thursday, Singapore time.

Markets continue to price in a more than 60 per cent probability of a 50-basis-point cut, despite strong US retail sales data making a case for a smaller cut.

On the contrary, markets see little prospect of a cut in the Reserve Bank of Australia’s cash rate at its meeting next Tuesday, given that policymakers have been sounding consistently hawkish.

“The hawkish RBA has certainly weighed on the ASX 200,” Sycamore said.

Australia’s labour market data due on Thursday and the monthly CPI indicator due next Wednesday will be the two potential flash data points for the RBA to gauge the temperature of the economy, Sycamore said.

Mining stocks closed 0.6 per cent lower after iron ore futures prices slumped amid prospects of firm supply and soft steel demand.

Rio Tinto and BHP Group fell 0.9 per cent each.

Healthcare stocks dropped 0.4 per cent.

Energy shares gained 0.7 per cent despite weaker oil prices.

Coal miner New Hope jumped 4.6 per cent to lead gains on the sub-index, a day after its full-year dividend beat estimates.

Gold stocks added 0.4 per cent.

Rate-sensitive financials climbed 0.4 per cent with National Australia Bank and Westpac advancing 1.4 per cent and 0.4 per cent, respectively.

New Zealand’s benchmark S&P/NZX 50 index fell 0.7 per cent to end the session at 12,596.98 points. REUTERS