Australian shares seesaw ahead of Reserve Bank decision
The ASX200 began trading on Tuesday with a 17-point fall, then climbed 20.7 points into the green in the second hour of trading before sinking back slightly into the red.
At noon the benchmark S&P/ASX200 index was down 7.3 points, or 0.08 per cent, to 8,582.2, while the broader All Ordinaries was down 4.5 points, or 0.05 per cent, to 8,821.9.
Capital.com analyst Kyle Rodda said markets had received a "quick punch in the guts" as Wednesday's US trade deal deadline approached.
Market participants were expecting a flurry of trade deals with trading partners, but so far only letters about tariffs on the likes of Japan, South Korea and South Africa had been announced.
But Mr Rodda added there was some merit to the idea this was all a negotiating tactic by the Trump administration designed to create urgency.
Closer to home, it is widely expected that the Reserve Bank will announce later on Tuesday afternoon that it is cutting the cash rate from 3.85 per cent.
Earlier on Tuesday, the NAB Business Survey rose to its highest level, in trend terms, in more than a year, suggesting business conditions were starting to stabilise or even turn around after a disappointing start to the year.
"After a volatile but soft year for business confidence, we have seen a trend improvement over the past three months," said NAB's head of Australian economics, Gareth Spence.
"It is now around its long-run average."
Seven of the ASX's 11 sectors were lower at midday, with consumer discretionary, financials, telecommunications and telecommunications higher.
Consumer staples was the biggest mover, dropping 1.1 per cent as Coles subtracted 1.0 per cent and A2 Milk retreated 3.3 per cent.
In health care, Botanix Pharmaceuticals had plunged 43.6 per cent to 17.5 cents after the clinical dermatology company announced sales figures for the launch of its treatment for primary axillary hyperhidrosis, or excessive underarm sweating.
There had been 16,000 prescriptions filled for 6700 patients since February, Botanix said, apparently underwhelming investors who were hoping for far more.
In the heavyweight mining sector, BHP was down 1.1 per cent and Rio Tinto had dipped 0.8 per cent, while Fortescue had added 0.6 per cent.
In financials, three of the four big banks were higher. CBA had added 0.3 per cent, NAB was up 0.5 per cent and ANZ had advanced 0.4 per cent, while Westpac was down 0.4 per cent.
In currency, the Australian dollar was trading for 65.15 US cents, from 65.24 US cents on Monday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Age
39 minutes ago
- The Age
ASX to slide on opening; Wall Street mixed
The Australian sharemarket is set to slide on opening following the Reserve Bank's surprise decision to hold interest rates steady, a move that caught many traders and economists who had anticipated a cut in rates off guard. Futures are pointing to a slight 14 point fall in the S&P/ASX 200 of 0.16 per cent on opening and the Australian dollar, propelled higher against the US dollar immediately after the Reserve's decision, was up 0.52 per cent to US65.25¢ at 5.45am AEDT. Stock indexes in the US were mixed in afternoon trading Tuesday, coming off a broad sell-off following the Trump administration's decision to impose new import tariffs set to go into effect next month on more than a dozen nations. The S&P 500 was up 0.1 per cent a day after posting its biggest drop since June. The benchmark index remains near its all-time high set last week. The Dow Jones Industrial Average was down 116 points, or 0.3 per cent, and the Nasdaq composite was 0.2 per cent higher. On Monday, President Donald Trump set a 25 per cent tax on goods imported from Japan and South Korea and new tariff rates on a dozen other nations scheduled to go into effect on August 1. Loading Trump provided notice by posting letters on Truth Social that were addressed to the leaders of the various countries. The letters warned them to not retaliate by increasing their own import taxes, or else the Trump administration would further increase tariffs. Just before hefty US tariffs on goods imported from nearly every country around the globe were to take effect in April, Trump postponed the levies for 90 days in hopes that foreign governments would be more willing to strike new trade deals. That 90-day negotiating period was set to expire before Wednesday. With the tariffs set to kick in now on August 1, the latest move by the White House amounts to essentially a four-week extension of its previous 90-day pause, wrote Tobin Marcus, an analyst at Wolfe Research.
Sydney Morning Herald
39 minutes ago
- Sydney Morning Herald
ASX to slide on opening; Wall Street mixed
The Australian sharemarket is set to slide on opening following the Reserve Bank's surprise decision to hold interest rates steady, a move that caught many traders and economists who had anticipated a cut in rates off guard. Futures are pointing to a slight 14 point fall in the S&P/ASX 200 of 0.16 per cent on opening and the Australian dollar, propelled higher against the US dollar immediately after the Reserve's decision, was up 0.52 per cent to US65.25¢ at 5.45am AEDT. Stock indexes in the US were mixed in afternoon trading Tuesday, coming off a broad sell-off following the Trump administration's decision to impose new import tariffs set to go into effect next month on more than a dozen nations. The S&P 500 was up 0.1 per cent a day after posting its biggest drop since June. The benchmark index remains near its all-time high set last week. The Dow Jones Industrial Average was down 116 points, or 0.3 per cent, and the Nasdaq composite was 0.2 per cent higher. On Monday, President Donald Trump set a 25 per cent tax on goods imported from Japan and South Korea and new tariff rates on a dozen other nations scheduled to go into effect on August 1. Loading Trump provided notice by posting letters on Truth Social that were addressed to the leaders of the various countries. The letters warned them to not retaliate by increasing their own import taxes, or else the Trump administration would further increase tariffs. Just before hefty US tariffs on goods imported from nearly every country around the globe were to take effect in April, Trump postponed the levies for 90 days in hopes that foreign governments would be more willing to strike new trade deals. That 90-day negotiating period was set to expire before Wednesday. With the tariffs set to kick in now on August 1, the latest move by the White House amounts to essentially a four-week extension of its previous 90-day pause, wrote Tobin Marcus, an analyst at Wolfe Research.
ABC News
2 hours ago
- ABC News
RBA interest rate cut in August looks all but certain, but how big will it be?
The Reserve Bank disappointed mortgage borrowers and shocked market economists by keeping interest rates on hold in July. But it's worth remembering that just a couple of weeks ago, the general expectation was that we'd need to wait until August for the next rate cut. That all changed when the Australian Bureau of Statistics released its monthly Consumer Price Index (CPI) Indicator from May on June 25, which showed headline inflation at 2.1 per cent over the past year and the RBA's preferred, more stable trimmed mean measure at 2.4 per cent. That's below the mid-point of the RBA's 2-3 per cent target band, hence why most of us who try to follow the central bank's thinking thought it would cut sooner rather than later. The only problem? The Reserve Bank doesn't trust the monthly ABS numbers. "The monthly CPI is not a full CPI, each month has different components in it," RBA governor Michele Bullock said at the press conference after Tuesday's meeting. "If you look at the monthly numbers, they bounce around a lot, and the other thing is that the trimmed mean for monthly isn't calculated the same way as the quarterly. Aside from making you wonder why the ABS bothers collecting monthly CPI figures that the RBA largely disregards, this leaves us following the pattern from earlier this year, where the RBA has waited for the more reliable (and out-of-date) quarterly inflation number before it decides to move rates. So, if you want to know whether the Reserve Bank will cut interest rates at its next meeting on August 12, you only need to wait until July 30. That's when the ABS releases the June quarter inflation data. And 2.6 per cent is the number to watch out for. In its latest economic forecasts, from the May meeting where it last cut rates, the RBA tipped a 2.6 per cent annual trimmed mean inflation rate. If the ABS figures hit that mark or lower, then an August 12 rate cut is all but certain. "If it comes in as we think it will, continuing to decline, then that validates our easing path, so that's what we're waiting for," Bullock explained at the presser. If they are higher, then there will be some debate about whether the RBA waits until September 30. Westpac's chief economist Luci Ellis, who used to perform much the same role at the Reserve Bank until two years ago, thinks a further delay is possible, but unlikely. "There is a (small) risk that even August is too soon for the RBA, if the CPI surprises on the upside," she warned in a note late on Tuesday. "Our own current nowcast for June quarter is marginally above what their May SMP (Statement on Monetary Policy) forecasts seem to imply." Although we know that a third of the monetary policy board (three out of nine members) thought there was already enough evidence to cut rates now, a position Ellis agrees with. She also thinks that it was likely the RBA staff recommended holding rates this month, although Bullock wouldn't confirm that or reveal how she or any other board members voted. "While votes are unattributed, we think it is unlikely that the external board members all voted to hold while the governor, deputy governor and new Treasury secretary all voted to cut," she argued. But, if inflation is confirmed as being on track, then another question might arise at August's meeting. That is how much to cut. Less than a fortnight before that meeting Donald Trump's latest tariff deadline expires. By August 1, we'll find out whether the US president has struck a raft of trade deals, has reinstated tariffs at the "Liberation Day" levels that shocked financial markets and sent them into a tailspin, or has opted to kick the can down the road a little bit longer. By the day the RBA makes its next rates decision, August 12, the world will find out whether China and the US have reached a deal that allows the world's two biggest economies to keep trading with each other, or whether the effective trade bans of tariffs of up to 145 per cent are re-imposed. While Australia is not expected to suffer much direct fallout from US tariffs, because we're only being hit with the lowest 10 per cent rate for most industries, the hit to our biggest export destinations — China, Japan, South Korea — could be severe. The RBA governor repeatedly denied that the bank was "keeping its powder dry" to be able to respond in the event of a financial meltdown. But she also observed that the RBA now had a lot more scope to cut interest rates in response to any crisis, compared to right before COVID when the cash rate was already at a record low 0.75 per cent. "It's possible that financial markets will react to all of these sorts of things. We've seen it in the past," she told reporters. A 0.5 percentage point rate cut? Even 1 percentage point if the US bond market and dollar melt down next month? Who knows … anything can happen.
