The ASX is expected to open higher ahead of this morning’s RBA meeting, with the ASX SPI 200 Futures trading up 3 points (0.04%) to 8,447 points.
The RBA is widely expected to leave rates on hold, despite stalling economic growth, a serious decline in household disposable income and living standards, and an inflation rate that continues to moderate.
ACTU secretary Sally McManus has called for interest rate relief, saying “It’s wrong for the Reserve Bank to want unemployment to go up before they can start cutting interest rates. Their job is to ensure full employment.”
Meanwhile, Australia’s top labour market expert Melbourne University economics professor Jeff Borland warned that the RBA was overestimating the strength of the country’s jobs market.
Overseas markets
On Wall Street, the recent rally took a breather overnight as technology stocks drove the main indices lower.
With little in the way of economic data to provide direction, equities were lower and bond yields modestly higher.
The S&P 500 index and the tech-focused Nasdaq index each fell 0.6% and the Dow Jones was off 0.3%.
Market attention is firmly on the US November CPI data due out later in the week, which will be a critical input to the Fed’s interest rate decision next week.
Money markets are pricing ~85% chance of a cut. CommSec’s international economic team expects the FOMC to cut by 25bp but cautions it is not yet a done deal.
European shares have closed at their highest levels in six weeks led by resources stocks with investors buoyed by the promise of renewed China stimulus.
Currencies
Currencies were mixed against the US dollar in European and US trade.
- The Euro rose from US$1.0533 to US$1.0592 and was near US$1.0555 in late US trade.
- The Aussie dollar lifted from US63.79 cents to US64.70 cents and was near US64.35 cents in late US trade. The AUD was helped by Chinese authorities revealing more support for the economy is on the way.
- The Japanese yen fell from 149.86 yen per US dollar to JPY151.33 and was near JPY151.20 in late US trade.
Commodities
Global oil prices rose on Monday on increased geopolitical risk after the fall of Syrian President Bashar al-Assad and as China flagged its first move towards a loosened monetary policy stance since 2010.
- The Brent crude price rose by $US1.02 or 1.4% to US$72.14 a barrel.
- The US Nymex crude price added $US1.17 or 1.7% to US$68.37 a barrel.
Base metal prices were mixed on Monday.
- Copper futures gained 2.1% after China said it would take more action to boost its lethargic economy.
- Aluminium futures slid 1%.
The gold futures price rose by $US26.20 or 1% to $US2,685.80 an ounce on Monday on renewed buying of the metal by China's central bank following a six-month hiatus. Spot gold was trading near $US2,660 an ounce in late US trade.
Iron ore futures jumped $US2.23 or 2.1% to $US106.34 a tonne on Monday, ending a two-session decline, as hopes of further Chinese stimulus overshadowed the top consumer's uncertain economic prospects.
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