Australian stocks poised to rise ahead of RBA decision
European and US stock markets started February on the front foot.
Australian futures are pointing to a strong start to the trading day for the S&P/ASX 200 index ahead of the Reserve Bank of Australia’s policy review, with bond traders predicting the central bank will hike the target cash rate to lean against sticky inflationary pressure.
Stock markets in the US and Europe were back on the rise at the start of the new month as some beat-up companies such as France’s Danone and Germany’s SAP recovered recent losses, while Wall Street settled down from the whipsawing of precious metals as stronger-than-expected manufacturing data buoyed investor confidence.
Corporate earnings continue at pace in the US this week, with Palantir Technologies due to report after the bell today, while Google-parent Alphabet and Amazon are among those on the calendar later in the week, while The Walt Disney Co declined after executives warned the current quarter will be soft.
Locally, Statistics New Zealand will release building consents for December, which have been showing a recovery in recent months, although ANZ economists have warned of a pullback last month.
Tighter times
The Reserve Bank of Australia announces its latest policy decision today, with bond traders predicting a 75% chance the central bank will hike the target cash rate a quarter-point to 3.85% to quell budding inflationary pressures.
The kiwi dollar fell to 86.36 Australian cents at 7am in Auckland from 86.70 cents yesterday.
“A rate hike would see the RBA become the first major central bank to tighten policy this cycle,” Bank of New Zealand senior markets strategist Jason Wong said in a note.
Still, the prospect of a hike hasn’t seeped into expectations for the ASX200 today, which is following a more upbeat mood in Europe and the US with futures pointing to a 1.1% gain when the benchmark index opens today.
Australia’s benchmark stock index has dropped for the past four sessions, with the sharp slump in gold and silver prices on Friday weighing on the resources-heavy exchange. Gold futures fell 1.1% to US$4,694 an ounce.
Stock markets in the US and Europe started February on a strong note, with the S&P 500 pushing towards a new record, up 0.7% in late trading after the Institute of Supply Management’s manufacturing index moving to an unexpected expansion in December.
The Dow Jones Industrial Average was up 1% in late trading, with heavy equipment maker Caterpillar leading the blue-chip index higher, while the tech-heavy Nasdaq Composite was up 0.9%.
Mixed media
Company earnings continued to roll out, with Disney shares declining after executives warned slowing tourism numbers were weighing on the media giant’s theme parks business, although strong results from its streaming and box office segments may bode well for New Zealand’s Sky Network Television and Vista Group International.
Palantir Technologies, a favourite among Sharesies and Hatch users, is due to report after trading closes today, while Alphabet and Amazon are due later this week.
Energy majors Chevron and Exxon Mobil followed Brent crude oil prices lower – futures were down 4.7% at US$66.08 a barrel at 7am in Auckland – after US President Donald Trump said Iran is negotiating seriously with the US over its nuclear programme.
Trump’s administration reached a trade deal with India, agreeing to cut tariffs to 18%, with India agreeing to stop buying Russian oil.
US non-farm payrolls figures for January will be delayed from the scheduled Friday release due to the latest partial government shutdown.
The kiwi dollar traded at 60.04 US cents at 7am in Auckland from 60.16 cents yesterday.
Across the Atlantic, stock markets were stronger with the UK’s FTSE 100 up 1.2%, Germany’s DAX 30 gaining 1.1% and France’s CAC 40 advancing 0.7%. Policy decisions from the Bank of England and European Central Bank are due later this week, with no change expected at either.
Locally, Stats NZ’s new building consents for December are due today, having shown a recovery in construction permits in recent months. Still, ANZ New Zealand economists said on Friday that its internal card spending data on engineering and surveying firms loosely tracks the series, and is pointing to a potential pullback.
And across the Tasman, BlueScope Steel’s new chief executive Tania Archibald has done a series of media interviews saying the steelmaker isn’t in talks with its suitors Steel Dynamics and SGH, but is open to a takeover proposal that meets its expectations.
