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ASX this week: US interest rate increase on the cards

ASX this week: US interest rate increase on the cards

The US Federal Reserve is widely expected to raise interest rates this week, on the back of the country's solid economic conditions.

Australia's S&P/ASX 200 index climbed 0.8% last week to close at 5,775.6 on Friday, with eight sectors posting gains compared to three that fell.

Consumers staples had the largest increase over five days (+3.7%), lifted by retail giants Wesfarmers (ASX: WES) and Woolworths (ASX: WOW).

On Friday: 

  • Brent oil dropped 1.6% to US$51.37 a barrel; down 8.1% for the week.
  • WTI crude lost 1.6% to US$48.49 a barrel; down 9.1% for the week.
  • Iron ore with 62% content delivered to Qingdao, China, fell 0.1% to US$86.72 a dry metric tonne; down 5% for the week.
  • Spot gold rose 0.1% to US$1,204.64 an ounce; down 2.4% for the week.
  • Australian dollar traded at 75.42 US cents, weakening 0.7% over the week; the currency was unchanged at 11:40am Sydney time today.

What to watch this week

The Federal Open Market Committee (FOMC) will hold a two-day meeting from 14 March to determine the US monetary policy. An outcome from the FOMC meeting will be available at 5am Sydney time on Thursday, 16 March. 

The world's largest economy created 235,000 new jobs in February, while jobless rate fell to 4.7% from 4.8%, data released last Friday showed. The job numbers beat the median economist growth estimate of 200,000, according to Bloomberg data.

"With the economy in solid shape, another rate hike is on the cards," said CommSec.

Bloomberg's calculations showed there's a 98% chance that the federal funds rate will be lifted by 25 basis points this week to the range of 0.75%-1%.

Changes in the federal funds rate – the interest rate at which US banks and credit unions lend to each other overnight – matter because it could affect the supply and cost of money, as well as other interest rates and foreign exchange rates.

Meanwhile, China will publish data on production, retail sales and investment tomorrow. The data covers the months of January and February. As Australia's largest trading partner, Chinese economic data is often important to watch.

On Thursday, the Australian Bureau of Statistics will release the monthly employment data.

"We expect that employment rose by 18,500 in February while the jobless rate was probably steady at 5.7%," CommSec said.

Stock movers

Below are the five best- and worst-performing ASX 200 stocks for the week ended Friday, 10 March.

Company/Index

ASX code

Weekly price change

iSentia Group

ISD

+15.5%

Ardent Leisure

AAD

+10.2%

Australian Agricultural Co

AAC

+8.3%

Nanosonics

NAN

+7.6%

Costa Group

CGC

+7.1%

S&P/ASX 200

XJO

+0.8%

Bellamy's Australia

BAL

-8.6%

Mayne Pharma

MYX

-9.1%

Resolute Mining

RSG

-11%

Saracen Mineral

SAR

-12.3%

Navitas

NVT

-17.3%

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.