The first rate cut in four years by the US Federal Reserve has put a rocket under the ASX, which hit a new 52-week high at the opening bell this morning (19 September).
The S&P/ASX 200 gained 40.30 points, or 0.49%, lifting to a new 52-week high of 8,182.40 points at 10.30am AEST.
Nine of the 11 sectors are higher along with the S&P/ASX 200 Index. Materials is the best performing sector, gaining 0.75% in early trade and 2.23% for the past five days.
Mining contractor Monadelphous (ASX:MND) advanced 2.05% in early trade following news it had secured several contracts worth $230 million, including one with BHP (ASX:BHP) for its Prominent Hill Expansion Project in South Australia.
Uranium explorer Deep Yellow (ASX:DYL) was up 2.38% and aluminium giant Alcoa (ASX:AAI) advanced 2.04%.
On Wednesday (18 September US time), the Fed announced it would cut rates by 50 basis points, which saw Wall Street move higher immediately following the news, but reversing that trend to close down.
Gold, meanwhile, edged back to just over US$2,550 ($3,773) an ounce following the news.
Fed Chair Jerome Powell says recent indicators suggest that economic activity has continued to expand at a solid pace.
“Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the committee’s 2% objective but remains somewhat elevated,” he says.
“In light of the progress on inflation and the balance of risks, the committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5%.”
The move follows several other countries – including Canada, China, Denmark, New Zealand, the UK, and the European Union – which have already cut interest rates.
The S&P/ASX200 is Australia’s leading share market index and contains the top 200 ASX-listed companies in terms of market capitalisation, and accounts for about 80% of the country’s equity market. The index is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalisation
It is recognised as the institutional investable benchmark in the country.
Write to Angela East at Mining.com.au
Images: US Federal Reserve
