FX.co ★ ASX 200 Struggles for Direction

On Wednesday, the S&P/ASX 200 witnessed fluctuations, settling around 8,840 points. This was largely influenced by the contrasting movements of gold stocks, which experienced a rally, and the declining performance of mining and energy companies. Gold shares surged by 1.2% to reach a record high, driven by the escalation in bullion prices due to increased safe-haven demand. This spike was prompted by the impending shutdown of the US government at midnight, potentially affecting approximately 750,000 federal employees due to Congress's inability to pass funding bills. Leading the gains in the gold sector were Northern Star, up by 0.9%, and Evolution Mining, which climbed 1.3%.

In contrast, the performance of major mining companies dragged the index down, with BHP, a key player in the sector, slipping by 1.7%. This decline followed concerns expressed by Prime Minister Albanese regarding reports that China's state iron ore purchaser had halted acquisitions from BHP. Furthermore, energy stocks saw a decrease of 0.6%, influenced by a drop in oil prices. Market sentiment was further impacted by the Reserve Bank of Australia's (RBA) decision to maintain interest rates at current levels while adopting a hawkish stance on inflation, casting doubt on the likelihood of an immediate rate cut. Presently, the market anticipates only a 40% probability of a rate cut in November, with expectations for, at most, one further reduction as the central bank awaits the third-quarter inflation data.