Australian shares set to open higher ahead of RBA decision
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The news: The Australian sharemarket is set to open higher, tracking overnight gains on Wall Street as traders await the outcome of the RBA’s policy meeting later on Tuesday.
The numbers: The Dow Jones index ended 0.46% higher, while the broader S&P 500 gained 1.03% and the tech-heavy Nasdaq added 1.19%. In the local market, ASX 200 futures were up 38 points or 0.49% at 7,734 points at 7:00am AEST on Tuesday.
The context: US stock indices closed higher for the third straight session as investors continued to gain hope that there was a greater chance of the Federal Reserve cutting interest rates this year.
Expectations for rate cuts by the US central bank have been tempered as the year has progressed, as inflation has proven stickier, and some investors had begun to worry they might not materialise at all, sending markets lower in April.
However, data last week showed US jobs growth slowing and the Fed also signalled it is leaning towards eventual reductions in borrowing costs. Traders are currently pricing in rate cuts worth 46 basis points from the Fed by the end of 2024, with the first cut expected in September or November.
In the local market too, all eyes will be on the RBA’s rate decision at 2:30pm AEST. While it is expected to keep rates on hold, a more hawkish tone from the central bank on the outlook for interest rates is likely.
The source: Reuters
