ASX 200 to open lower; RBA interest rate decision in focus

June 17, 2024 08:11 AM AEST | By Investing

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ASX 200 to open lower; RBA interest rate decision in focus

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Investing.com - Australian shares are forecasted to start the week with a slight dip, mirroring Wall Street's performance due to economic concerns and political uncertainties in France, as market participants prepare for the Reserve Bank's (RBA) rate decision and commentary on Tuesday.

The RBA is expected to retain the cash rate for the fifth consecutive policy meeting. The central bank is seeking signs of sustainable decreases in price pressures in the face of a decelerating economy, a tight job market, and high inflation levels.

The RBA's mission to bring inflation back to target is further complicated by the slightly expansionary budget of the Albanese government, as per an RBA internal analysis. This comes at a time when wage growth is escalating due to imminent tax cuts and energy rebates.

By 8:15 am AEST (10:15 pm GMT) ASX 200 Futures were down by 0.6%. The Australian dollar traded at US66.13¢, following a 0.5% gain last week.

In addition to the RBA, seven other central banks, including the Bank of England, the Swiss National Bank, and Norway's Norges Bank, will hold their policy meetings this week.

Last Friday, the Dow Jones Industrial Average fell by 0.2%, the S&P 500 remained steady, and the NASDAQ Composite rose by 0.1%.

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Longer-dated US government bond yields have decreased, with the US 10-year Treasury yield at 4.22%. However, the policy-sensitive 2-year return rose by 2 points to 4.71%.

In Europe, stocks continued their widespread sell-off due to France's political uncertainties, causing the pan-European STOXX 600 to fall by 2.4% on the week, its largest single-week percentage drop of 2024.

Oil prices dipped slightly on Friday in response to a survey indicating declining US consumer sentiment. Despite this, Brent crude oil prices saw a near 4% increase over the week, the highest since April, as investors anticipate strong demand for crude oil and fuel in 2024.

Iron ore futures also experienced a slight rise of 0.2% to $US107.33 per tonne on Friday due to higher-than-expected production.

This article first appeared in Investing.com

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