Australian stocks to open slow ahead of RBA meeting

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asx market
A pedestrian and financial journalist look at their phones as they are reflected in a window in front of a board displaying stock prices at the Australian Securities Exchange (ASX) in Sydney, Australia, November 9, 2016. Reuters/David Gray

The Australian index, S&P/ASX 200, was expected to open lower on Tuesday ahead of the Reserve Bank of Australia (RBA) meeting. The RBA is expected to release its monetary policy decision, including the main interest rate.

The local share price index futures were down 0.1percent at 5720. This was a 26.5-point discount to the underlying S&P/ASX 200 index close.

The benchmark, however, closed 0.29 percent or 16.9 points higher on Monday at 5,746.51. The broader All Ordinaries index was up 13.1 points, or 0.23 percent, at 5788.5. National turnover was 2.83 billion securities traded, worth $4.52 billion. The local index ending on the green was led by retail indices, which shrug off global volatilities including China’s announcement to cut its Gross Domestic Product (GDP) outlook.

Unanimous expectation

Reuters reported its latest poll among 67 economists, revealing that all of them believe the RBA is less likely to increase the interest rate for this year. The central bank’s latest move of an interest rate hike was on 2009 when it increased the cash rate by 25 basis points to 3.25 percent.

The RBA, however, also implemented dramatic cut rates starting 2008 following the global economic crisis. It also made two rate cuts in 2016. This left the interest rate to remain unchanged at 1.5 per cent as of December last year.

Share prices of companies in Australia that produce oil and mine are also expected to decline, following an overnight decline of the commodity prices. Oil prices declined on Monday as a downbeat economic growth forecast for China raised concern about demand. The increased production in the US also hinted for the West Texas Intermediate (WTI) crude to settle at $53.20 a barrel on the New York Mercantile Exchange.

Overseas cue

Taking a cue from the overseas trading, Australian shares on Tuesday will track the performance of Wall Street as well. All major US indices ended lower on Monday as the Dow Jones Industrial Average was down at 51.37 points or 0.24 per cent. The Nasdaq Composite Index also ended lower at 5,849.174, losing 21.58 point or 0.37 percent. New Zealand's benchmark S&P/NZX 50 index was flat at 7171.57 in early trade.

The turbulence surrounding Wall Street came from the renewed uncertainties over Trump’s administration. US President Donald Trump signed on Monday a revised executive order banning citizens from six Muslim-majority nations from traveling to the United States. The revised order removed Iraq from the list after his controversial first attempt was blocked by the courts.