ASX poised to rise on RBA’s neutral interest rate outlook

Stock Markets

Australian shares are poised to open higher today on weakness in the AUD triggered by the RBA’s neutral interest rate stance. Yesterday, RBA governor Lowe indicated that a rate cut was just as likely as a rate hike, with a cut warranted if the economy softens, a shift from its longstanding bias towards tightening.

Wall Street’s main benchmarks retreated overnight from two-month highs, as video game developers Electronic Arts Inc (-13.31%) and Take-Two Interactive Software Inc (-13.76%) reported disappointing revenue forecasts while investors eagerly await for more clarity on US/China trade developments. The Dow Jones, S&P 500 and NASDAQ 100 all marginally down overnight, losing 21.22 (-0.08%), 6.09 (-0.22%) and 25.90 (-0.37%) points respectively.

ASX200 futures are currently up 27.0 points. 

Today’s data releases: Q4 New Zealand unemployment rate

Commodities and Currencies

Brent crude prices are currently up 1.0% to $US62.61 a barrel and is likely to retest the recent high of $US63.73.

Iron ore is currently flat at $US85.53 per tonne. Commonwealth Bank analysts speculate that iron ore prices are heading back to $US100 per tonne in the short term as a result of the recent supply shock.

Nickel prices have benefited from concerns that a force majeure by Brazil’s Vale on some iron ore contracts could lead to restrictions in its nickel supply. Consequently, nickel has hit its highest in more than four months and is currently sitting at $US12925 per tonne.

The spot price of gold is down 0.66% and is now hovering around US$1310.45.

The AUD hit a one-week low on the RBA’s neutral interest rate outlook, falling 1.6% to US71.17¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.