Australian shares outlook - Higher on Fed decision, metal prices

Australian shares outlook - Higher on Fed decision, metal prices

	Published : Wed, 31 Jan 2007 23:42 By : Agencies Print this Story

SYDNEY (XFN-ASIA) - Share prices are expected to open higher after the US Federal Reserve decided overnight to keep US interest rates on hold at 5.25 pct, which led to a big rise in the Dow Jones Industrial Average, dealers said.

Dealers said resource stocks were likely to be favored following solid gains posted by metal prices in London trading, and with Rio Tinto expected to release a record annual profit after the market closes today.

Yesterday, the S&P/ASX 200 fell 39.1 points or 0.67 pct to close at the day's low of 5,773.4. The key index closed off a new intra-day record high of 5,829.3. Despite the fall, the benchmark index advanced 103.5 points or 1.8 pct during the course of last month.

The broader All Ordinaries index retreated 33.8 points to close at 5,757.7, having set a new intra-day record high of 5,808.2.

The S&P/ASX 200 March futures contract ended its overnight session up 44.0 points at 5,786.0, suggesting a positive start to trading.

In New York, share prices closed higher on the the Federal Reserve interest rate decision and stronger-than-expected economic data, which included GDP figures for the fourth quarter of last year showing growth accelerating to an annual rate of 3.5 pct.

On Wall St, the Dow Jones Industrial Average closed up 98.38 points at 12,621.69.

News Corp ended 1.20 pct higher and National Australia Bank's American Depositary Receipts rose 0.85 pct.

Base metal prices rose on bargain-hunting in trading in London yesterday, although investors remained wary of of the wage negotiations at BHP Billiton's Cerro Colorado copper operation in Chile and Xstrata's nickel operations in Ontario.

Gold prices rose in line with a sell-off in the US dollar as traders considered that the combination of solid growth in the US and reduced inflationary pressures there indicated stable interest rates in future. The most active April Comex gold contract rose 0.60 usd to 658.5 usd an ounce.

Here today, Alumina is due to release its annual report, while Rio Tinto's majority owned uranium miner ERA has already given its annual report, which precedes the release at 5.00 pm (0600 GMT) of Rio Tinto's own results.

(1 usd = 1.29 aud)

paul.daniel@xfn.com