Market Wrap / Fed in focus

Our local market reversed gains on Wednesday afternoon with investors taking a risk-off approach ahead of the US Federal Reserve rate decision. The S&P/ASX 200 lost 0.1% to 8309.40 points.

Mineral Resources shares lost 0.8% after completing the sale of two exploration permits to Hancock Prospecting for an initial consideration of $780 million.

Insignia Financial rejected Bain Capital’s $2.67 billion takeover bid, over concerns the offer would not provide fair value to its shareholders. The move saw its shares slide 4.2%.

Mining stocks initially pushed the market higher with BHP resuming operations at two mines in Western Australia after heavy rains, alleviating supply concerns. However, the sector finished in the red.

Bank stocks were mixed with Commonwealth Bank losing 0.9%, while Westpac rose 0.6%.

Clarity Pharmaceuticals was the big mover, jumping 12.1% as it revealed it had developed a product contributing to the diagnosis and treatment of cancer. And Vulcan Energy rose 1.9% after signing a $1.4 billion loan commitment for the financing of the largest lithium resource in Europe.

On the macro front, the Federal Government downgraded its forecast for economic growth in FY25 to a sub-par 1.75%. The release of the Mid-Year Economic and Fiscal Outlook showed a projected deficit of $26.9 billion for the current 2024/25 year, compared with $28.3 billion forecast in its May budget. 

Recent data for the September quarter showed that without public investment in infrastructure and rebates on electricity costs, the economy would be in recession.

The Aussie dollar slipped to $0.63 cents, its lowest level since October 2023. 

Overnight, all eyes will be on the Fed’s decision and its outlook for 2025 with the market now pricing in a 95.4% chance the central bank will cut interest rates.

Locally, national accounts data is set to show household wealth at a record high.