Australian markets are bracing for a week dominated by the release of critical inflation figures, which are expected to heavily influence the Reserve Bank of Australia’s (RBA) upcoming interest rate decision. The S&P/ASX 200 is set to open higher, with futures indicating a gain of 62 points, or 0.7 per cent. This follows a slight dip of 0.5 per cent last week, amidst international economic movements and a stronger-than-expected jobs report that has increased market speculation of an RBA rate hike.
Economists are closely watching the consumer price index (CPI) data for the December quarter, with trimmed mean inflation being a key indicator. Westpac and ANZ economists predict a rise of 0.7 per cent and 0.8 per cent quarter-on-quarter, respectively, figures they suggest would be low enough for the RBA to maintain current rates. The resources sector, which has seen substantial gains, will also be under scrutiny as ASX-listed commodities groups release quarterly reports. Firms such as Liontown Resources, PLS, Mineral Resources, and Iluka are all set to release their quarterly reports this week.
The global stage will also play a role. Investors will be monitoring earnings releases from US tech giants like Apple, Tesla, and Meta, which could impact market sentiment. Decisions from the Federal Reserve and the Bank of Canada are expected to hold interest rates steady, adding another layer to the complex economic landscape. The Australian dollar has already responded to the anticipation of potential interest rate rises, surging to multi-month highs against several major currencies.
Ten Cap is an Australian investment management firm. Atlas Funds Management is an Australian investment management firm focused on delivering sustainable returns to its clients. The week’s data and decisions are poised to shape the near-term trajectory of the Australian economy and financial markets, making it a period of heightened vigilance for investors and policymakers alike.
