The ASX has dropped today, down 21.10 points or 0.30% to 7,027.50, following a tense week on Wall Street. Things have been bumpy in the US with the annual cat-and-mouse game of shutdown the government on Capitol Hill, but the crisis has yet again been narrowly averted.
The index has lost 0.58% for the last five days but is virtually unchanged over the last year to date.
With Australian house prices once again on track to beat records, the only consistent sectors in a slow day’s trade were Real Estate (0.30%), Utilities (0.34%) and Materials (0.41%).
Health Care was down considerably (-1.29%), with Consumer Staples (-1.05%) and Consumer Discretionary (-0.93%) also lagging.
All eyes on Bullock ahead of RBA meeting
With the real estate market still running warm in key states around the country, there is pressure building on the RBA to make another move when it determines rates at tomorrow’s meeting.
eToro market analyst Josh Gilbert threw some cold water on the idea for now:
“It’s a big week for Michele Bullock as she hands down her first-rate decision in her new role as RBA Governor – just don’t expect any fireworks.
“This week’s decision will likely see rates stay on hold for the fourth consecutive month as the Reserve Bank edges closer to the end of its longest tightening cycle in decades.
“Last week’s inflation and retail sales data support the RBA keeping rates on hold, with consumption slowing and core inflation trending lower. However, the recent jump in oil prices is a cause for concern and the real test will come in late October, before November’s board meeting, when Q3 CPI is handed down.
“Investors' focus will shift to Michelle Bullock’s statement following the decision for any clues on what’s next. The board will likely remain hawkish, leaving the door open for another hike, especially with some risks still at play.
“However, it would be a surprise to see the board hike on the back of an oil-induced spike in inflation with other data points cooling."
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