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ASX this week: US interest rates in focus

ASX this week: US interest rates in focus

US Federal Reserve policymakers will meet to decide on their interest rate setting, while the Australian share market enters the February earnings reporting season.

Australian stocks rebounded last week after two straight weeks of losses, as gains in three heavyweight sectors – materials (+3.9%), real estate (+1.4%) and financials (+1.3%) – helped lift the S&P/ASX 200 index 1% higher over the week to 5,714.

On Friday:

  • Brent oil declined 1.3% to US$55.52 a barrel; up less than 0.1% for the week.
  • WTI crude slipped 1.1% to US$53.17 a barrel; up 1.4% for the week.
  • Iron ore with 62% content delivered to Qingdao, China, was not traded due to the Lunar New Year public holidays; it ended Thursday at US$83.34 a dry metric tonne or 3.6% higher over four days.
  • Spot gold climbed 0.2% to US$1,191.20 an ounce; down 1.6% for the week.
  • Australian dollar traded at 75.51 US cents, weakening less than 0.1% over the week; the currency edged up to 75.53 US cents at 10:35am Sydney time today.

What to watch this week

The Federal Open Market Committee (FOMC), the US Federal Reserve arm that sets the country's monetary policy, will meet for the first time this year from 31 January to 1 February.

Market pricings suggested that the FOMC is unlikely to call for an increase in US interest rates this week, CommSec said, adding that tweets from US President Donald Trump are keeping markets on edge.

In his first week in office, the new White House chief signed several executive orders, which don't require approval from the Congress, to change various US government policies, including on border controls and the Trans-Pacific Partnership free trade agreement.

"Markets remain pensive in the light of Trump economic agenda and potential stimulatory impact," CommSec said. 

It's another busy week for US listed corporates lined up to announce their latest financial results. Key results to watch out for include those from Apple, Exxon and Facebook.

Meanwhile, the Australian market starts its earnings reporting season this week, with CYBG and Navitas some of the companies submitting their report cards.

"There will be much focus on whether companies are now experiencing better fortunes than was the case around mid-2016," said CommSec.

In China, its National Bureau of Statistics will release their purchasing managers reports on Wednesday, which indicates the economic health and business conditions of the manufacturing and services sectors.

Stock movers

Below are the five best- and worst-performing ASX 200 stocks for the week ended Friday, 27 January.

Company/Index

ASX code

Weekly price change

Tassal Group

TGR

+17%

Sandfire Resources

SFR

+11.9%

ResMed

RMD

+9.7%

Altium

ALU

+9.4%

Alumina

AWC

+9.2%

S&P/ASX 200

XJO

+1%

TPG Telecom

TPM

-4.7%

Domino's Pizza Enterprises

DMP

-5.8%

Mantra Group

MTR

-5.9%

Technology One

TNE

-7.7%

Brambles

BXB

-13.3%

Past performance is not a reliable indicator of future performance. Source: Bloomberg

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. The inclusion of companies in this article does not constitute a recommendation and it’s vital to remember that the value of shares in any company can fall as well as rise, which means you could lose money by investing in them. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia.