Local market rebounds with commodity prices
The ASX200 is enjoying some relief after yesterday’s rout, gaining 53 points in morning trade.
Buying is heavily concentrated amongst materials and energy stocks, which is to be expected following the welcome bounce in commodity prices. Also, given yesterday’s sell off was so savage, it appears some investors are being enticed by the value proposition. However, FMG is a notable anomaly. Despite a steady iron ore price overnight, the stock is going against the grain, shedding around 2% and raising a few eyebrows in the process.
This morning’s monthly building approvals read has come in at an increase of 11.4%, sharply higher than expected. This, along with the growing chorus calling for a rate cut, is driving property stocks higher today.
The current account deficit has also bettered expectations, 12.5 billion vs. 13.5 billion, although market impact was minimal with traders now focussed on the RBA meeting.
Next up is the cash rate and RBA statement at 2:30pm. While the rate will remain steady today, the statement may provide clues to the RBA’s bias. As mentioned above, there is growing expectation that there may be one more rate cut left in the cycle, fuelled by Deputy Governor Lowe’s recent comments.
The Aussie dollar is likely to be most sensitive to the statement. Although, given its recent plight and the increasing rate cut chatter, the risk may be to the upside. It’s currently trading around 0.8483 USD.
For further comment from CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
The ASX200 rebounded due to a bounce in commodity prices, which led to increased buying in materials and energy stocks. Additionally, the previous day's sell-off created attractive value propositions for investors.
Property stocks are rising due to a significant increase in monthly building approvals, which came in at 11.4%, much higher than expected. Additionally, there is growing speculation about a potential rate cut, which is also driving interest in property stocks.
FMG's stock is an anomaly today, shedding around 2% despite steady iron ore prices. This unexpected movement is raising eyebrows among investors, as it goes against the general trend of rising materials stocks.
The current account deficit was better than expected, coming in at 12.5 billion compared to the anticipated 13.5 billion. However, its impact on the market was minimal as traders are more focused on the upcoming RBA meeting.
Investors are keenly awaiting the RBA statement, as it may provide insights into the central bank's future monetary policy bias. Although the cash rate is expected to remain steady, there is growing anticipation of a potential rate cut in the near future.
The Australian dollar is likely to be sensitive to the RBA statement. Given the recent discussions about a possible rate cut, the risk for the Aussie dollar may be to the upside, especially if the statement hints at future monetary easing.
The Australian dollar is currently trading around 0.8483 USD. Its movement is closely watched in light of the upcoming RBA statement and the ongoing rate cut discussions.
For further commentary on market movements, you can contact CMC Markets at 02 8221 2135.
Call 1300 880 160
Start a chat
Schedule a call
