RBA Rate Decision (Tuesday)
The RBA will be delivering its first interest rate call of the year this week – and it’s going to be one to watch.
The general consensus is we’re heading towards a cut but no matter which way it goes, this is already the most important rate call of the year following more than a year-long pause at 4.35 per cent.
We are well overdue now for the 2025 Federal Election date to be set and it would seem like the Labor Government is waiting on some good economic news to precede the announcement. Although the sitting Government has no direct influence over the RBA’s rate call, this would be the kind of development that would allow them to set a date under the pretence of successfully navigating Australia through rocky inflationary waters.
Certainly, the numbers support a rate cut, but the RBA is not one to be swayed by pressure and the central bank chair Michelle Bullock has not given any solid indications of her sentiment heading into this meeting.
On the other hand, this could easily be another pause under the belief that there is work to be done to keep inflation tamed as international economic conditions become more volatile. This would be fairly upsetting news to Aussie businesses and households alike, and I wouldn’t be surprised to see the Federal Government call an election with a date much sooner than the May deadline to get ahead of the threat of a worsening economic outlook.
Many are hoping that the RBA’s relative silence since the start of the year is a sign it isn’t trying to temper expectations of a cut, which has led economists to believing a cut is on the cards. What’s going to be more important is what it actually has to say in the meeting minutes supplied following this Tuesday’s big call.
AU Unemployment (Thursday)
The RBA and economists will be hoping for a bump in unemployment come Thursday to support the argument for further rate cuts. Australia’s labour force has continued to grow at a good rate for the last 12 months and we have hit a record number of employed individuals, along with a few other all-time highs in the employment metrics.
The experienced reality might be different for those currently jobhunting, and data from Seek and NAB indicate job ads are down and application volumes per job ads are way up. The RBA cares more about the official metrics, though, and until we see a significant bump above the 4 per cent mark we’ve been hovering around, this could prove to continue being one of the core pain points on the road to further rate reductions.
Australian Reporting Season
Aus Earnings season continues, with some massive names in mining. This week, we’ll see BHP, Pilbara Minerals, Rio Tinto and Whitehaven Coal posting results. According to eToro data, Pilbara continues to be the ASX’s champion, maintaining top spot as the most held stock by Australian investors and the third most-held ASX stock among investors in the rest of the world. It’s hard to see that changing anytime soon, with the company actively expanding its global footprint and expectations of a solid outlook this week.
In tech, we’ll see Megaport and telecoms giant Telstra. Conglomerate powerhouse Wesfarmers will also be posting results against a backdrop of the first rate call of the year. Both companies will be no doubt hoping for an RBA call that brings some consumer confidence back into the equation. Overall, Telstra is in a good position to have a steady 2025 but there is little on the cards that might excite newcomers.
Wesfarmers’ results may be more positive and rewarding in the short term, with Kmart and Bunnings having already recorded growth, and Officeworks and Priceline, among others, expected to have fared well. What may sting is the imminent closure of Wesfarmers’ online retail operation Catch.com.au, which has crumbled under pressure from more aggressive players such as Amazon and Temu.
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