Investors cautious ahead of Fed policy meeting

THE Australian sharemarket is set for a cautious start ahead of the US Federal Reserve meeting on interest rates.

THE Australian share market is set for a cautious start ahead of the US Federal Reserve meeting on interest rates.

The outcome of the Fed’s two-day policy meeting will be known in Australia by Thursday morning.

CommSec chief economist Craig James says it will be a nervous wait for investors, with expectations the Fed will “more than likely” lift interest rates some time this year.

Wall Street stocks ended lower on Friday after a fairly volatile week, he said.

The Dow Jones fell by 146 points or 0.8 per cent, with the S&P 500 index down by 0.6 per cent and the Nasdaq losing 0.4 per cent. “Basically, we can put that down to the fact there was very solid gain the day before,” Mr James said.

“I think for investors on Friday, they were looking to take some of the profits they made before, square up some of their positions.

“Investors want to see what the Federal Reserve is going to say.” Mr James said there was a “degree of weakness” in the energy sector, particularly due to falling oil prices.

US Nymex crude fell $US2.21 per barrel, or 4.7 per cent, to US$44.84.

“The concern is there is a glut of oil and as a result we’re seeing oil prices continue to soften,” Mr James said.

Major currencies were generally weaker against the greenback, with the Australian dollar falling from about 76.7 US cents to 76.35 US cents at the US close.

Locally, the market will also be looking out for the minutes of this month’s monetary policy meeting of the Reserve Bank of Australia board, which kept rates on hold, due for release on Tuesday.

-AAP