Was it all a joke?
Glenn Stevens’ comedic debut will be put to the test today when the minutes of the Reserve Bank’s latest board meeting are released.
The RBA governor created heartache a fortnight ago with his quip in Brisbane that the board deliberated for a very long time before keeping rates on hold at its July meeting. The currency gyrated in a series of wild swings as equities relished the prospect of a rate cut in August.
It was left to a deputy governor the following day to explain that it was just the boss having a chuckle at everyone else’s expense. Perhaps it was the droll delivery.
The mood on local markets is mildly optimistic this morning. While it again is within striking distance of breaking through 5,000, recent history has seen local investors pull back from a concerted push through the barrier.
A collective sigh of relief over China’s growth and solid second-quarter earnings from Citigroup drove Wall Street further into record territory. But the gains were limited by weaker-than-expected American retail sales.
Citi stock has risen almost doubled in the past year and its double-digit earnings growth follows on from strong results from rivals JP Morgan and Wells Fargo.
Australian resource stocks will be dominated this week by quarterly reports. Rio Tinto releases its quarterly update at 1500 AEST this afternoon with investors looking for more stable production after the previous quarter’s weather affected output and any changes in full year estimates (see Tim Treadgold's Re-examining Rio).
BHP’s American stock enjoyed modest gains overnight and is looking to push higher this morning, particularly given a 1.6% rise in iron ore prices overnight.
Elsewhere, though, there were mixed performances from commodity prices. Copper and precious metals and oil all enjoyed gains while zinc, lead and nickel prices eased.
China’s economic performance, with growth bang on target at 7.5%, yesterday allayed fears that the world’s second biggest economy was headed for a hard landing.
The numbers also indicated the country’s attempts to reorient its maturing economy towards a consumption based growth model rather than relying on investment and infrastructure is showing signs of success. But questions remain over the country’s shadow banking industry and the recent spike in interbank lending rates and soaring property prices.