ASX quiet at noon ahead of Fed meeting

The local share market is mostly quiet this morning as traders debate the odds of a supersized interest rate hike by the Federal Reserve this week.

At noon on Monday the benchmark S&P/ASX200 index was up 6.7 points to 6745.8, a gain of 0.1 per cent, while the broader All Ordinaries was up 1.6 points, or 0.02 per cent, to 6976.8.

Most are predicting the Federal Reserve Open Market Committee will raise interest rates by 75 basis points when the two-day meeting concludes Thursday morning, Australia time, but Betashares chief economist David Bassanese said that a “shock and awe” 100 basis point rise can’t be ruled out.

“Indeed, it could be the Fed has not alerted its usual media buddies as it wants to surprise the market!” he wrote in a note.

But equities markets have actually managed to rally on each day of the Fed meeting this year, on relief that the rate hikes haven’t been even worse, Mr Bassanese wrote.

So there’s a scenario where markets could rally after a 100 basis point rise, “on the view that we’d potentially be closer to the end of Fed tightening”.

Just two sectors were higher – mining and property, which had gained 1.1 and 1.4 per cent, respectively.

BHP was up 0.7 per cent to $38.32, Fortescue Metals had gained 0.8 per cent and Rio Tinto was up 0.8 per cent to $93.22.

Lake Resources had risen 16.7 per cent to $1.085 after the lithium company announced progress on a “demonstration plant” at its Kachi Project in Argentina.

Elsewhere on the market, the consumer discretionary, consumer staples and financials sectors were flat and the other six had lost ground.

The big retail banks were mixed, with CBA up 0.7 per cent to $94.86 but the other three in the red. NAB was the worst performer, falling 0.8 per cent to $29.715.

Origin Energy was down 0.3 per cent to $5.795 as the oil and gas company offloaded its gas rights in the Northern Territory’s Beetaloo Basin to focus on “cleaner” projects.

Tech was the worst laggard, falling 1.1 per cent with Afterpay owner Block down 3.0 per cent to $97.9 and Link Group down 3.0 per cent to $3.365 as its potential acquisition by Canada’s Dye & Durham hit a snag.

The Australian dollar meanwhile was buying 67.06 US cents, from 66.75 US cents at Friday’s close.