Hopes of rate cuts from major central banks in the first half of the year are continuing to buoy equity markets, making this week’s local inflation data pivotal for investor sentiment.
Already a subscriber?Australia’s sharemarket will have another shot at its all-time high this week, building on the momentum that has pushed major global equity benchmarks to fresh records as investors position for a world-wide rate cutting cycle.
The US S&P 500 also finished in the red on Friday but jumped 2.3 per cent over the week – its strongest performance this year – as records tumbled.Europe’s benchmark Stoxx 600 also hit an all-time, as did Japan’s Nikkei. The UK’s FTSE 100 is closing in on its own peak, bolstered by data that suggests Britain is no longer in a recession.
For Australia, bond traders expect the Reserve Bank won’t start easing monetary policy until November and are pricing in around 36 basis points of cuts this year – which is equivalent to less than two 0.25 percentage point rate cuts.As such, this week’s monthly inflation report on Wednesday will be a key focus for local investors.
The RBA’s next board meeting is not until May, so policymakers will have the complete picture of quarterly inflation data – due on April 24 – before its next decision. It has left the cash rate at 4.35 per cent for the past three meetings.Retail sales data for February is also due this week and is expected to show a rise of 0.4 per cent on January, boosted in part by Taylor Swift’s Eras tour, which kicked off late in the month.
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