RBA rate decision, Wall Street to weigh on Australian shares

The news: The Australian sharemarket is poised to start lower after a decline on Wall Street, with local investors also watchful ahead of the Reserve Bank rate decision later on Tuesday.

The numbers: The Dow Jones index is trading 0.61% lower, while the broader S&P 500 lost 0.24% and the tech-heavy Nasdaq dropped 0.19%. In the local market, ASX 200 futures were trading 29 points or 0.38% lower at 7,558 points at 7:00am AEDT on Tuesday.

The context: US stocks were pressured by rising Treasury yields overnight after Federal Reserve chair Jerome Powell pushed back firmly against market speculation of early rate cuts. In an interview, Powell said more evidence on a sustainable downtrend in inflation was needed to warrant lower rates, underlining the Fed’s cautious approach after fresh data showed US services sector growth picked up in January. Local traders are also focused on the RBA’s decision on rates at 2:30pm AEDT. The central bank is widely expected to keep rates on hold at the end of its first two-day meeting of the year, but commentary will be closely scrutinised to assess its future path.