Australia: Market gains on solid corporate earnings

Headline indices of the Australia share market advanced on Thursday, 22 August 2019, as risk sentiments bolstered by gains overnight in Wall Street on a dovish signal from the Federal Reserve and better than expected earnings from local firms and US retailers. Around late afternoon, the benchmark S&P/ASX200 index rose 21.93 points, or 0.34%, to 6,505.20. Meanwhile the broader All Ordinaries index, which tracks the nation's 500 biggest listed companies, inclined 24.43 points, or 0.37%, to 6,597.

U.S. stocks closed higher on Wednesday, as dovish signal from the Federal Reserve and strong quarterly results from retailers such as Target and Lowe's lifted investor sentiment. The Dow Jones Industrial Average closed 240.29 points higher, or 0.9%, at 26,202.73. The S&P 500 gained 0.8% to close at 2,924.43. The Nasdaq Composite jumped 0.9% to 8,020.21.

The Federal Reserve's meeting minutes showed the Fed has no "pre-set course" for cutting rates. The Fed cut rates by 25 basis points in July, while signaling that it was only a "midcycle adjustment" and the central bank was not returning to the stimulus era.

Undershooting inflation continues to be a key concern among Fed members, as the minutes highlight several members were in favor of a more aggressive cut to the tune of 50 basis points at last month's meeting. The 2% inflation target the Fed aims for has consistently undershot this year with Core PCE currently running at 1.6% annualized rate. This was the main concern harped on by the Fed and Chair Powell who called this a 'mid-cycle adjustment' as an insurance bet aiming to spur inflation.

Market participants remain keenly focused on this weekend's Economic Symposium in Jackson Hole after the Federal Reserve released the July FOMC Minutes that continue the dovish tone which started to grip the central bank earlier this year.

The solid corporate earnings provide much-needed relief to financial markets which have been roiled over recent months by the Sino-US trade war and the broadening economic fallout of the dispute.

The energy sector led the gains, with gas firm Santos up 4.4% after country's No.2 independent gas producer posted a 89% jump in half-year profit, boosted by its acquisition of Quadrant Energy and strong output from its Cooper Basin fields in South Australia.

Electricity & gas retailer Origin Energy jumped 4.4% after it reported a 41.6% rise in its annual underlying profit, helped by robust production at its Australia Pacific LNG project.

Retailer Coles Group rose 4.5% as the announcement of a special dividend along with strong online sales overshadowed an annual profit drop.

CURRENCY NEWS: The Australian dollar, a liquid proxy for emerging market and China risk, was little changed against greenback on Thursday. The Australian dollar traded mostly sideways and changed hands at $0.6775.

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