Closing Bell 22th September: ASX Mitigates Early Losses as Energy Stocks Experience a Rally

BoJ Maintains Ultra-Low Interest Rates

The Bank of Japan (BoJ) has decided to continue with its ultra-low interest rates and dovish stance on future monetary policy, indicating no immediate plans to withdraw its extensive monetary stimulus. Following a two-day meeting, the BoJ has kept the interest at 0.1% on excess reserves of financial institutions and maintained a target of around 0% for the 10-year government bond yield. The central bank has reiterated its commitment to sustaining this ultra-loose monetary policy until the 2% inflation target is stably achieved.

Australian Bond Yields Reach Decade High

Australian bond yields have experienced a significant increase, with the three-year bond yields reaching 4.09%, a 10-week high, and the 10-year return hitting a decade peak at 4.38%. This surge was influenced by a sharp rise in US Treasury yields after the Federal Reserve reinforced its resolve to maintain high interest rates and indicated fewer rate cuts in the upcoming year. The Australian bond futures predict a rate hike to 4.35% by March 2024, with a 27% probability of a subsequent increase.

Oil Prices Fluctuate Amidst Russian Export Ban

Oil prices exhibited volatility, initially decreasing due to Western economic challenges, but later increasing by up to $US1 a barrel following Russia’s sudden ban on fuel exports. This ban, aimed at stabilizing Russia’s domestic fuel market, has led to a nearly 5% rise in heating oil futures as Russian fuel buyers seek alternatives. Despite these fluctuations, oil prices remain supported by global supply concerns, with US crude stocks at their lowest since July 2022 and OPEC+ continuing production cuts.