The Aussie market looks set to continue its upward trajectory with most major markets rallying overnight after Janet Yellen, chair of the US Federal Reserve, pulled forward expectations for a rate rise in the US from March next year to December this year.
“Yellen’s comments were decidedly more hawkish than expected, and perhaps it brings about more certainty for once. This has led to some obvious moves across a spectrum of global assets,” said Mark Lennox, senior private adviser at HC Securities.
He added, “The US Fed looks very determined on maintaining its tightening bias and ultimately trying to cap asset prices.”
On the local market, domestic traders will be focused on US dollar strength and companies that may benefit from it including CSL Limited (CSL), Ramsay Health Care (RHC), Amcor (AMC) and Magellan Financial Group (MFG).
Other companies sensitive to an increase in US rates like CPU and QBE Insurance may also benefit, according to Lennox. On the other hand, property trusts may come under pressure due to their debt as interest rates rise.
Among the bankers, Lennox noted that the ANZ Banking Group’s result has been driven by weak trading income.
“ANZ Banking Group (ANZ) has released their full year results this morning missing expectations by around 1%, driven by much weaker trading income,”
“Trading income is a lower quality item and given gyrations in global markets through August/September, this is not unsurprising. Provisioning levels were as per guidance and Australasian operation has been well managed,” Lennox added.