ASX200 – A Quiet Economic Calendar Leaves the U.S Markets and Commodities to Give Direction

The ASX200

It was a bullish day for the ASX200 on Tuesday. Following a modest 0.05% gain on Monday, the ASX200 rose by 0.95% to end the day at 7,314.

Optimism from the RBA that the omicron strain would unlikely derail the economic recovery was key to the upside on the day. News of the PBoC easing property curbs cutting the reserve ratio requirement by 50 bps was also market positive.

Key going into the session, however, was a bullish overnight session on Wall Street. The U.S futures added further support, pointing northwards in the session.

The Stats

It was a quiet day on the economic data front, with stats limited to housing sector data.

In the 3^rd quarter, house prices increased by 5.0% versus a forecasted 5.0% increase for the quarter. The House Price Index had risen by 6.7% in the previous quarter.

The numbers had a muted impact on the Aussie Dollar, however, with the markets looking ahead to the RBA monetary policy decision and rate statement.

From China

Trade data was also market positive.

In November, China’s US Dollar trade surplus narrowed from $84.54bn to $71.72bn. While the trade surplus narrowed, both imports and exports were better than expected.

• In November, exports increased by 22% year-on-year versus a forecasted 19%. Exports had risen by 27.1% in the month prior.
• Imports were up 31.7% versus a forecasted 19.8%. In October, imports had been up by 20.6%.

While the stats drew interest, the RBA monetary policy decision and rate statement were key.

In line with market expectations, the RBA left the cash rate unchanged at 0.1%. Additionally, the RBA decided to continue purchasing government securities at the rate of A$4bn a week until at least mid-Feb 2022.

Vis-à-vis the Omicron strain, the RBA viewed the strain as a new source of uncertainty, but did not expect it to derail the economic recovery. The statement revealed that the RBA expects the economy to return to its pre-Delta path in the first half of 2022.

The Market Movers

It was a relatively bullish day for the banks. ANZ led the way, rising by 1.55%, with NAB and Westpac seeing gains of 1.07% and 1.11% respectively. CBA and Macquarie Group ended the day up by 0.40% and by 0.17% respectively.

Commodity stocks also had a bullish session. Fortescue Metals Group Ltd rallied by 1.52% to lead the way, with Rio Tinto and BHP Group rising by 0.89% and by 0.91% respectively. Newcrest Mining ended the day up by 0.78%.

Other Asian Markets

Elsewhere, it was a bullish session. The CSI300 and the Nikkei 225 rose by 0.60 and by 1.89% respectively, with the Hang Seng Index rallying by 2.72%.

The Day Ahead

It’s a particularly quiet day ahead on the Aussie economic calendar. There are no material stats from Australia to provide direction through the session.

The lack of stats will leave commodity prices, COVID-19 news and the U.S futures to provide direction.  Overnight, it was a particularly bullish session on Wall Street, which should deliver early support.

The Futures

In the futures markets, at the time of writing, the ASX200 was up by 22 points.

For a look at all of today’s economic events, check out our economic calendar.