AU Morning Wrap: ASX Falls as Powell Dashes Hopes for a Rate Pivot in 2023

Wall Street Summary
US stocks fell in volatile trade after the Fed lifted the target federal funds rate by half a percentage point, as expected, but disappointed the market with a hawkish outlook for next year. The central bank raised its peak rate projection and warned it needed to see inflation to cool significantly before changing its stance.

This morning's rate hike was the smallest in five meetings, following four straight raises of three-quarters of a percentage point. The increase lifted benchmark rates to 4.25-4.5 per cent.

What surprised the market was an increase in the bank’s forecast rate top or "terminal rate". The bank projected the target federal funds rate will reach 5.1 per cent next year. Only two members of the Federal Open Market Committee saw benchmark rates staying below 5 per cent. Seven officials saw rates rising as high as 5.75 per cent.

Australian shares followed Wall Street lower at the open on Thursday, taking direction from a sharp reversal in New York after the Federal Reserve released its final policy decision of the year and revised its rate and economic projections.

Fed chairman Jerome Powell said officials were not close to ending their aggressive campaign of interest-rate increases.

Breville Group led the decliners, falling 7 per cent. Lithium miners Pilbara Minerals, Sayona, Liontown and Core Lithium were also lower.

Coal miners New Hope and Whitehaven gained.

The price was equivalent to $US8299/dmt on a SC6.0 CIF China basis, inclusive of freight costs.

Petspiration is the owner and operator of retail brand PETstock and has a network of 276 stores.

"This is the first time ASIC has used this delegated power against an operator of licensed market infrastructure for the purposes of auditing the support and maintenance of a clearing and settlement system," the market regulator said.

It says the suspension that has been in place since early May is necessary as it waits for an update on its mining license in the Democratic Republic of Congo. It has not commented on the reasons why it's yet to receive the license.

• Oil prices extended gains, now up around 8.3% in the last three sessions.

EIA crude oil report showed a massive jump in stockpiles, the weekly headline number was a 10.2 million barrel build compared to consensus expectations of a 3.4 million draw.

• Gold spot prices dipped after the hawkish FOMC decision and press conference.

Prices were quick to recoup losses and trading around breakeven for the session.

"Gold's recent gains were mainly driven on hope that the Fed could be done with a last rate rise in February, but this FOMC decision shows that is not the case." - Oanda senior market analyst, Ed Moya