Australian stocks jump at the open on Fed rate hike
SYDNEY: Australian stocks jumped 0.8 percent at the open Thursday after the US Federal Reserve announced its first interest rate increase in more than nine years.
The benchmark S&P/ASX200 index put on 38.7 points to 5,067.1, adding to a 2.42 percent gain Wednesday in anticipation of the benchmark federal funds rate being raised by a quarter point to 0.25-0.50 percent.
The Australian dollar fell after the news but quickly recovered and was trading at 72.39 US cents at 2310 GMT, from 72.06 US cents on Wednesday.
IG Markets analyst Angus Nicholson said that “what is clear is that equity markets are taking the rate hike as a positive”.
“The fact that the Fed was able to hike rates indicates that the US economy has finally developed enough upward momentum to withstand higher interest rates,” he added.
“The question for many investors now is whether this momentum in equity markets is likely to develop into a full blown ‘Santa rally’ through to the end of the year.”
Among Australian stocks, the Commonwealth Bank was up 1.76 percent at Aus$80.48, Rio Tinto rose 2.70 percent to Aus$44.18, but fellow mining giant BHP slid 0.93 percent to Aus$17.02.