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Markets wrap: ASX rises and Aussie dollar leaps after US Fed less hawkish than expected

The ASX rose and the Aussie dollar shot up on Thursday after the US Fed appeared to rule out massively hiking interest rates.

The benchmark ASX 200 ended a three-session losing streak in the wake of the Fed’s overnight decision to hike rates by 50 basis points and assuage fears future hikes could be as much as 75 basis points.

Investors were clearly braced for a more hawkish statement from chairman Jerome Powell and duly piled into riskier assets such as technology stocks on word the central bank was not “actively considering” going steeper.

Camera IconThe local bourse chased strong Wall Street gains to finish 60 points higher. NCA NewsWire/ Gaye Gerard Credit: News Corp Australia

Energy firms also improved on an overnight oil price rise, while the mining and real estate sectors clawed back some of their recent losses.

The local bourse chased strong Wall Street gains to finish 60 points, or 0.8 per cent, higher at 7364.7 and record the first rise of the week.

The broader All Ordinaries added 74.4 points, or 1 per cent, to end the day at 7639.2.

The Australian dollar spiked to 72.50 US cents on the Fed statement as the threat of 0.75 per cent hikes off the table provided currency traders an excuse to wind back extended US dollar long positioning.

Gold prices also rose sharply on a weaker Greenback and rallied throughout the Asian session, gaining more than 1 per cent to $US1901.65 an ounce.

Local gold miner Newcrest duly added 2.7 per cent to $26.89, Northern Star was up 2.2 per cent to $9.66, and Evolution rose 2.1 per cent to $3.94.

The overnight relief rally handed Wall Street traders their best session in two months and ended a three-day decline for the ASX a couple of days after the Reserve Bank of Australia spooked investors with a stronger-than-expected rate hike.

However, analysts warned that it remained a time of great volatility.

Camera IconThe overnight relief rally ended a three-day decline for the ASX. NCA NewsWire / James Gourley Credit: News Corp Australia

“As we’ve experienced during the recent FOMC meeting and ASX movement, the initial risk-on reaction may be more of a function of technical and short-term momentum dynamics, especially given that the next meeting for both the Fed and RBA is only four weeks away,” noted IG markets analyst Hebe Chen said.

“As (Federal Reserve chairman Jerome) Powell signalled, the Fed would keep hiking at that pace (or even higher) over the next couple of meetings, that is to say, we can probably foresee more repetition of the ‘guessing game turning into a relief rally or even a surprise drop.”

With the exception of Commonwealth Bank, which rose 0.7 per cent to $103.71, the big lenders were the most notable weakness on Thursday’s market.

This includes NAB, which fell 0.6 per cent to $32.25 despite lifting first-half cash profit 4.1 per cent to $3.48bn and hiking its interim dividend from 60 cents to 73 cents.

ANZ lost 1.7 per cent to $26.91, Westpac slipped 0.3 per cent to $24.01, and Macquarie Group fell 1 per cent to $202.66.

Traders also shunned wealth manager Janus Henderson after a disappointing first-quarter result, sending the stock 13 per cent lower to $37.76.

Camera IconThe Australian dollar spiked to 72.50 US cents. NCA NewsWire / Jeremy Piper Credit: News Corp Australia

Miner BHP finished 0.1 per cent higher at $47.45 and Rio Tinto rose 0.4 per cent to $111.58 even as iron ore futures sagged, while Fortescue Metals shot up by 3.5 per cent to $20.83.

Lithium stocks were also strong after a recent bout of selling.

Mineral Resources leapt 3.6 per cent to $56.18, Pilbara Minerals was 7.6 per cent higher at $2.83, Vulcan Energy rose 5.5 per cent to $8.02, Allkem gained 4.8 per cent to $12.47, and Core Lithium was 8.8 per cent ahead at $1.305.

Among technology stocks, Afterpay owner Block Inc rose 1.7 per cent to $145.53.

Wisetech Global was up 3.7 per cent to $43.82, Xero leapt 3.4 per cent to $95.20, Appen climbed 4.4 per cent to $6.70, and Altium was up 2.1 per cent to $32.13.

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