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The ASX in 5: ASX 200 edges higher on strength in mining stocks

We highlight five things that investors and traders need to know on Thursday, 29 July.

US Federal Bank walks the middle road

Last night’s meeting of the US Federal Reserve passed without much fuss. The Fed opted to take the middle road, simultaneously reassuring markets it remains focused on supporting the economy, whiling subtly hinting its getting close to unwinding emergency policy support. Crucially, the Fed altered its guidance to suggest its pursuing “further progress” rather than “substantial further progress” towards meeting its inflation and jobs market targets. The markets proved largely unfazed by the meeting, with the US 500 finishing the night’s trade flat, and the US ten-year yield closing only slightly lower.

Facebook falls victim to high expectations

Facebook Inc (All Sessions) was the latest tech giant to deliver quarterly results for the week, and true to trend, the company delivered better than expected revenue and earnings. Revenue for the quarter came in at $29.08 billion against the $27.86 billion estimate, while EPS exceeded expectations at $3.61 versus the $3.02 forecast. Despite the stellar numbers, and also true to the week’s trend, Facebook share’s fell in post-market trade following the release of results, with investors seemingly latching onto warnings from the company of slowing future growth.

ASX 200 as mining stocks jump

The Australia 200 has rebounded today after yesterday’s decline, with Australia’s benchmark index gaining 0.3% as of mid-afternoon trade. Though there’s be several pockets of strength for the market, it’s been continued strength amongst the miners that’s driven a large part of the index’s gains. The materials sector is up over 8% in the last month, and was given a boost by Rio Tinto Ltd's earnings reported last night. It’s shares are up by around 1.7% today, after reporting a bumper set of results, that included an interim dividend of $3.76 per share, and a special dividend of $1.85, with rally coming despite warnings from the company of a likely slow down in revenues in the future.

Gold starts reacting to real rates

Gold has been a listless trade in recent weeks, despite some movement in the US Dollar, and a historic drop in US real rates this week. The ten-year real yield, a rate the price of gold is historically highly correlated to, hit 1.17% overnight following the US Federal Reserve’s meeting and a new record low. The price of gold has pushed towards $US1820 at stages in Asian trade today, still some way from $US2070 per ounce price of gold in August last year when real rates were last this low.

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Attention turns to US GDP data

The highlight of the night’s trade will come in the form of US GDP data for the second quarter, with another period of stellar growth predicted for the US economy. Consensus estimates is for growth to have expanded by 8.5% Q/Q, up from 6.4% in the previous quarter.

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