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Energy index lead gains on ASX
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Tech stock advance 1.3%
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Interest rate futures price 25 bps hike by Fed
(Updates to close)
By Mehr Bedi
March 22 (Reuters) - Australian shares ended higher on
Wednesday, mirroring gains in global markets, on hopes that the
U.S. Federal Reserve's interest rate decision will address
investor concerns of a meltdown in the global banking sector.
The S&P/ASX 200 index closed 0.9% higher at 7,018.10
points. The benchmark had notched gains of 0.8% on Tuesday.
The rescue of Credit Suisse over the weekend helped stem a
brutal selling in bank shares, and came just in time for the
Fed's two-day monetary policy meeting that commenced yesterday.
Investors are keenly awaiting the outcome of this
high-stakes meeting, with traders wondering whether the Fed will
raise interest rates modestly or pause its hiking cycle to
ensure financial stability.
U.S. interest rate futures are now pricing a 25 basis points
(bps) rate hike on Wednesday - a dramatic turnaround from a
steep 50 bps rate hike expected before the banking crisis.
"The decision is crucial to Australia as it is still a very
small part of the global market," said Brad Smoling, Managing
director at Smoling Stockbroking.
"Australian banks buy their capital from UK and U.S. banks,
so we are naturally very sensitive to any change in the official
rates from the Federal Reserve."
This comes a day after minutes from the Reserve Bank of
Australia's latest policy meeting suggested it was considering a
rate pause in April, if the upcoming retail trade and inflation
data provided evidence of cooling demand.
Energy stocks tracked oil prices higher to climb
4.2%. Shares of Santos and Woodside Energy jumped 3.3% and 5.2%, respectively. Tech stocks tracked their Wall Street peers higher
to add 1.3%. Financials advanced 0.6%, with the 'big four'
lenders all trading in the green.
Bucking the trend, local gold stocks plunged 2.5%,
posting their worst day since Mar. 8, as bullion prices dropped. New Zealand's benchmark S&P/NZX 50 index finished up
0.5% at 11,586.93.
(Reporting by Mehr Bedi in Bengaluru; Editing by Varun H K)
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