ASX200 RBA Monetary Policy and Corporate Earnings in Focus

From the weekend, NBS private sector PMIs from China failed to peg the ASX200 back. This was in spite of the Manufacturing PMI falling from 49.6 to 49.2 in October.

The more influential Caixin Manufacturing PMI provided support at the start of the week.

Ahead of the stats on the day, a bullish end to the previous week for the DJIA set the tone going into the Monday session.

The Stats

The manufacturing sector was in focus in the early hours of the day.

In October, the AIG Manufacturing Index from 51.2 to 50.4.

According to the October survey,

• The sector decelerated for a 4^th consecutive month, with the PMI falling to its lowest level since Sept-2020.
• For of the activity indexes contracted in October, with declines in production, employment, exports, and supplier deliveries.
• Forward orders continued to expand at a strong pace, however, suggesting a likely recovery once COVID-19 restrictions are eased further.

From China

In October, the Caixin Manufacturing PMI rose from 50.0 to 50.6.

According to the October survey,

• While only modest, the rate of expansion was the most marked in 4-months.
• Total new orders rose by the greatest extent in 4-months.
• Domestic demand drove new orders, with export orders falling for a 3^rd consecutive month.
• Production fell for a 3^rd month in a row, leading to a further decline in employment.
• Supply chain delays became more widespread, prices for materials, energy, and transport on the rise.
• The rate of input price inflation was the steepest seen since Dec-2016.
• As a result, output charges also rose at a marked rate.
• Manufacturers were generally optimistic, however, that output would rise over the next 12-months.

The Market Movers

It was a mixed day for the banks. Westpac slumped by 7.36% as the markets reacted to a miss on cash profits. NAB (-0.91%) also saw red, while ANZ (+0.04%) and CBA (+1.54%) found support. Macquarie Group ended the day up by 0.43%.

Commodity stocks also had a mixed session. Fortescue Metals Group Ltd rallied by 2.87%, with Rio Tinto (+0.75%) also finding support. BHP Group (-0.47%) saw red, however, with Newcrest Mining falling by 1.77%.

Other Asian Markets

The Hang Seng fell by 0.88%, with the CSI300 ending the day down by 0.37%. Uncertainty over China’s economic outlook continued to weigh following losses from the final week of October.

The Day Ahead

It’s a quieter day ahead on the Asian economic calendar. Building consent figures from New Zealand will likely have a muted impact on the ASX200.

On the monetary policy front, the RBA will deliver its November monetary policy decision, however. With the markets expecting the RBA to stand pat on cash rates, the Rate Statement will be key.

Any hawkish chatter would deliver bank stock support, though much will remain in the hands of supply chains and impact on commodity prices.

Away from the economic calendar, corporate earnings will also continue to influence.

The Futures

In the futures markets, at the time of writing, the ASX200 was up by 13 points.

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