After the Reserve Bank of Australia’s (RBA) announcement of its interest rate, Tuesday morning saw the ASX 200 remain on edge. The ASX 200 index tracked the top 200 companies in Australia. It was trading for A$8,135, a 3% drop from its previous high.
RBA interest rate decision
RBA was the main driver of the ASX 200, as it decided to keep interest rates at the highest level in 13 years (4.35%) for the 9th consecutive meeting.
Michele Bullock, the Governor of the Bank of Canada noted in her statement that they were aware of the uncertainty continuing to affect the global economy. She has said repeatedly that the bank is unlikely to cut rates in this year. This will make the central bank the last one of the major banks not to.
RBA is confident the inflation in the country has passed. Australia’s third-quarter inflation rate continued to decline, according to the latest data.
On an annual basis, it dropped from 1,0% in the Q2 to 0,2% in the Q3. It was a decline of 3.8% from Q2 to Q3 on a year-onyear basis, which is higher than the median estimation of 2.3%.
Closely watched CPI figures, the trimmed average and weighted median CPI numbers fell to 3,5% and 3,8% respectively. The RBA will need to take a more measured approach when reducing rates.
Because of this, the ASX 200 has underperformed American counterparts. Stock indices tend to do better when central banks cut rates because this encourages investors to move from fixed-income investments into stocks.
The Fed and US elections
Next up on the list of ASX 200 news is Donald Trump’s upcoming US presidential election, in which he will take on Kamala Harri.
Trump’s victory in the US and Australia would be a major impact for both countries. Stock markets performed well in his first term due to his emphasis on tax reductions and deregulation.
The COVID-19 epidemic and trade wars were the main factors that affected the increase. These trade wars often affect Australia because China is a major part of its economy. China is Australia’s largest trading partner and where most of the products are sold.
The end of elections will result in more gains on the stock market, regardless of which candidate wins.
Federal Reserve will announce its rate announcement on Wednesday. Analysts predict that the Federal Reserve will cut rates by 0.25 percent at this meeting. The US and Australian stock markets will benefit from a more dovish Fed.
ASX 200 will react also to the earnings of some of Australia’s top corporations.
Fortescue Mining, Wesfarmers and ASX released their results on Wednesday, while Westpac Banking Group published its numbers on Monday. National Australia Bank, ANZ Holdings and Nexgen Energy are also notable companies who will release their financial results this week.
ASX 200 Index Analysis
TradingView ASX 200 Chart
On the daily chart, the ASX 200 has seen a significant uptrend over the last few months. The ASX 200 index has been in a strong uptrend for the past few months.
Index has also remained higher than the 200-day Weighted Moving Average and Ichimoku cloud indicators.
The index is therefore likely to have a bullish break out after the American elections. The next level to be watched is $8,400. A drop below A$8,065 is a sign of more decline, and the next level to be watched will be A$8,000.
The post ASX 200 Outlook after RBA Decision; ANZ NAB REA Earnings Ahead may change as new information becomes available.
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