Evening Wrap: ASX 200 higher, Woodside bounces 5%, Fed set to hike another 25 bps

The relief rally continues for a second consecutive day, Woodside bounces 5% thanks to higher oil prices and oversold conditions, gold stocks pull back sharply as spot prices ease from US$2,000 an ounce and the Fed is set to raise rates by 25 bps tomorrow morning.

Let's dive in.

ASX 200 Session Chart

The ASX 200 gaps up and closes near session highs (Source: Market Index)

Markets

The ASX 200 is now on a two-day winning streak, up 1.7%. The market is starting to find its footing again, but the upcoming FOMC could be a freight train ... or the light at the end of the hiking cycle.

• Energy stocks continued to rebound, led by Woodside (+5.2%)

• Staples posted broad-based gains, with heavyweights Woolworths, Coles and Endeavour all around 1.6% higher

• Discretionary was another outperformer led by travel names like Flight Centre (+3.4%), Webjet (+3.6%) and Corporate Travel (+3.0%)

Economy

No major economic announcements but the next 36 hours is absolutely stacked with UK inflation data, the Fed's interest rate decision and Bank of England rate decision.

Latest news

Market Insights

A pretty short one today. See you guys tomorrow morning for the spicy Fed rate decision.

Fed fireworks

The Fed's interest rate decision and pressor will take place tomorrow at 5:00 am AEDT.

The market expects another 25 bp hike to take the fed funds rate to 4.75% - 5.0%. According to CME's Fedwatch tool, the probability of 25 bps is currently 84.9%. Whereas the likelihood of a pause sits at just 15.1%.

This will mark the Fed's ninth consecutive hike and the fastest on record going back to 1963. The previous cycle was nine hikes as well, but it took three years from December 2015 to December 2018.

So 25 bps is effectively priced in but what else is priced in is 100 bp worth of rate cuts by the September FOMC. Commentary will be key, so let's see if Powell takes the brakes off the usual 'hike till the job is done'.

Interesting news and movers

Trading higher

• +5.9% Helloworld (HLO) – Acquires stake in Australiareiser (Tue)

• +5.8% Aeris Resources (AIS) – New sulphide lens discovery

• Uranium sector move: Boss Energy (+6.3%), Deep Yellow (+5.8%), Aurora Energy (+5.5%)

• Energy sector move: Woodside (+5.2%), Beach Energy (+5.0%), New Hope (+4.9%), Santos (+3.3)

Trading lower

• -19.5% Weebit Nano (WBT)

• -8.5% Myer (MYR) - Ex-dividend

• -4.8% Global Lithium (GL1) – Continuation selloff, down 11% in previous three

• Gold sector move: Perseus Mining (-4.8%), Gold Road (-4.3%), Northern Star (-3.6%), Evolution Mining (-3.1%)

Broker updates

Citi’s take on Tech and reporting season:

• “We expect Tech stock performance to continue to be driven by macro, but with yields close to peaking, the rates/yield headwind is easing in our view.”

• “Interestingly, recent results did not show a wide spread impact from slowing macro (except for Megaport and Fineos).”

• “Siteminder, Xero and Domain are our top picks, while Zip and Appen are at the bottom.”

Macquarie’s lithium market update:

• “We remain constructive on the lithium market outlook despite near-term headwinds from lower lithium prices and slow EV sales.”

• “We lower our short-term price forecasts but upgrade long-term outlook, underpinned by higher operating and development costs.”

• “MIN and PLS are our preferred Australian producers while Tianqi remains our key pick for Chinese miners.”

Macquarie’s iron ore note:

• “The March China steel survey highlighted an improvement in market sentiment in both steel and iron ore.”

• “We maintain our preferences for BHP given its organic growth options; MIN benefits from lithium exposure and DRR offers low volatility exposure.”

Scans