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FIVE at FIVE AU: Green day for the ASX ahead of another “bad” rates decision

Published 03/07/2023, 04:05 pm
Updated 03/07/2023, 04:30 pm
© Reuters.  FIVE at FIVE AU: Green day for the ASX ahead of another “bad” rates decision
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The ASX is up today. The S&P/ASX200 gained 40.80 points or 0.57% to 7,244.10, crossing above its 50-day moving average. Over the last five days, the index has gained 2.04% and is currently 4.28% off of its 52-week high.

The top-performing stocks in this index are United Malt Group Ltd and Silver Lake Resources Ltd up 8.86% and 7.25% respectively.

Looking at the sectors, most were in the green with Consumer Discretionary leading the way up 1.50%. Materials was the next best performer with a 1.18% gain. Only two sectors missed the mark today: Information Technology fell 1.56%, while Healthcare was down just 0.14%.

All in all it was a strong day ahead of tomorrow’s rates decision.

IG Markets analyst Tony Sycamore said of the pending decision, “Since the June meeting, the data that has followed has been mixed. On the more hawkish side of the ledger, employment (+75.9k vs 15k exp) and retail sales (+0.7% vs 0.1% exp) were stronger than expected.

“However, the monthly CPI indicator missed expectations (5.6% vs the 6.1% exp), as did Q1 2023 GDP (+0.2% vs 0.3% exp). The minutes from the RBA's recent board meeting were less hawkish than feared, omitting forward guidance that further hikes may be needed.

“On balance, due to the RBA's ongoing concerns around inflation, wage growth, subdued productivity, resilient consumer spending and other global central banking peers sounding more hawkish, we look for the RBA to raise rates tomorrow by 25bp to 4.35%. This is an out-of-consensus call with the market pricing in just a 22% (5bp) chance of a 25bp rate hike.

“Market pricing of the RBA's terminal peak rate rose stands at ~4.53%, reflecting an expectation of two more rate hikes before year-end, taking the RBA's official cash rate to 4.60%, which is in line with our expectations.”

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