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ASX this week: US likely to lift interest rates

ASX this week: US likely to lift interest rates

The spotlight this week will be on the US Federal Reserve's monetary policy meeting, where investors are broadly anticipating an increase in the nation's interest rates.

Australia’s benchmark S&P/ASX 200 index gained 2.1% last week to 5,560.6 on Friday, as the top four heavyweight sectors – financials, materials, real estate and industrials – all advanced.

On Friday:

  • Brent oil rose 0.8% to US$54.33 a barrel, paring its weekly loss to 0.2%
  • WTI crude increased 1.3% to US$51.50 a barrel; down 0.3% for the week
  • Iron ore with 62% content delivered to Qingdao, China, fell 0.1% to US$81.66 a dry metric tonne, up 5% for the week
  • Spot gold shed 0.9% to US$1,159.86 an ounce; down 1.5% for the week
  • Australian dollar traded at 74.49 US cents, weakening 0.1% over the week; the currency dropped 0.1% to 74.39 US cents at 11:28am Sydney time today

What to watch this week

The Federal Open Market Committee, an arm of the US Federal Reserve, will meet from 13 to 14 December to determine the country’s monetary policy.

Their interest rate decision will be available early morning Sydney time on Thursday, 15 December.

CommSec said it is widely expected that the Fed will raise its funds rate to a target band of 0.5-0.75% from 0.25-0.5%, in view of “the recent lift in commodity prices, stronger US economy and resulting lift in inflation”.

Theoretically, an increase in US interest rates would result in a stronger US dollar as investors’ demand for the greenback grows.

The Dow Jones Industrial Average closed at 19,756.85 last Friday, possibly hitting the 20,000-point level soon, CommSec pointed out.

China, Australia’s largest trading partner, is scheduled to release several key economic indicators this week, namely retail sales, production and investment.

“Annual growth rates are slowing, but that is ‘normal’ for a maturing economy,” said CommSec.

Stock movers

Below are the five best and worst-performing ASX 200 stocks for the week ended Friday, 9 December.

Company/Index

ASX code

Weekly price change

DUET Group

DUE

+18.7%

Japara Healthcare

JHC

+18.1%

Bapcor

BAP

+10.4%

Alumina

AWC

+10%

G8 Education

GEM

+9.8%

S&P/ASX 200

XJO

+2.1%

Technology One

TNE

-4.9%

Asaleo Care

AHY

-5%

Webjet

WEB

-5.1%

Regis Resources

RRL

-5.2%

Sirtex Medical

SRX

-41.1%

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.