Australia Market falls ahead of Federal Reserve's meeting

Headline indices of the Australian financial market were tad softer on Tuesday, 19 March 2019, as investors opted to lock in gains on caution before the U.S. Federal Reserve and other major central banks meetings outcome later in the week. ASX subsectors were mostly lower, with shares in healthcare, information technology, and energy issues being notable losers whereas materials and consumer discretionary issues were notable gainers. Around late afternoon, the benchmark S&P/ASX200 index fell 5.73 points, or 0.1%, at 6,184.80 points, while the broader All Ordinaries shed 8 points, or 0.13%, at 6,275.60.

The US Federal Reserve Open Market Committee is scheduled to meet on Tuesday and Wednesday, with an announcement scheduled for Wednesday, and speculation it may hold interest rates steady, announce plans for the end of asset roll-off from its balance sheet, and lower projections for the number of interest-rate hikes this year. Central banks in Thailand, the Philippines and Indonesia are all scheduled for policy meetings.

 

In the euro zone, purchasing manager survey numbers on Friday will give an indication of the health of the region's industrial and service sectors at the end of the first quarter.

Shares of materials and resources inclined, as iron ore prices received a boost on supply concerns as Brazilian producer Vale was ordered to shut one of its mines due to safety concerns. BHP Group (BHP) and Rio Tinto (RIO) have both climbed by more than 1% while Fortescue has been more subdued, with a gain of 0.4% after lifting 5.4% yesterday. Coal miner New Hope was down 10% after it said greater expenses from its increased stake in the Bengalla coal mine had offset its increased revenue from coal prices.

Financial stocks were mixed, with ANZ up 0.23%, while Commonwealth was down 0.1% and NAB was down 0.04%. Westpac Bank (WBC) rose 0.3% after announcing it is exiting from providing personalised financial advice and selling some of its BT Financial Planning arm to Viridian Advisory.

ECONOMIC NEWS: Home prices across Australia's capital cities fell by 2.4% in the three months to December, trimming the total value of the country's dwellings to A$6.7 trillion. Prices fell 5.1% across the whole of 2018, according to the Australian Bureau of Statistics' Residential Property Price Index, released on Tuesday. The December quarter drop was greatest in Sydney - where home prices fell by 3.7% - and Melbourne - which recorded a 2.4% fall - while values increased 0.1% in Adelaide and 0.7% in Hobart.

Reserve Bank minutes released on Tuesday show the board raised "significant uncertainties" over the state of the Australian economy when they kept the cash rate at a record low 1.5% this month.

CURRENCY: The Australian dollar eased against the U.S. dollar, as traders digest the release of RBA minutes from the March meeting, a small bounce in weekly consumer confidence and home prices falling 2.4% over the December quarter across the capital cities. The Aussie dollar was quoted at 70.97 US cents, from 71.12 US cents on Monday.

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