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Returning from a four-day Easter long weekend the Australian share market looks set for a steady start to the day. Amid a series of economic news releases the spotlight will be of the Reserve Bank of Australia’s (RBA) interest rate decision this afternoon. Commsec reports the market is pricing in a 74 per cent chance the RBA will cut rates by 25 basis points to a new record low of 2 per cent. In the week ahead America’s quarterly earnings season will kick off with the release of Alcoa’s results on Wednesday and the US Federal Reserve will release its meeting minutes.
US economic news
The Labor Department reported non-farm payrolls rose 126,000 in March, falling short of expectations for a gain of 245,000. The unemployment rate stayed steady at 5.5 per cent as the participation rate fell to 62.7 per cent.
Global markets
Wall Street firmed 0.3 per cent last week and also started the trading week higher: The Dow Jones Industrial Average gained 0.7 per cent to close at 17,881, the S&P 500 gained 0.7 per cent to close at 2,081 and the Nasdaq gained 0.6 per cent to close at 4,917.
European markets climbed more than 1 per cent last week but remained closed on Monday for Easter public holidays.
Asian markets moved higher last week but finished mixed on Monday: Japan’s Nikkei slipped 0.2 per cent, Hong Kong’s Hang Seng firmed 0.8 per cent, and China’s Shanghai Composite climbed 1 per cent.
The Australian share market advanced 0.7 per cent on Thursday ahead of the Easter break: The S&P/ASX 200 index rose 38 points on Thursday but lost 21 points over the week to end at 5,899. On the futures market the SPI is 9 points lower.
Currencies
The Australian dollar at 7:30am was buying $US0.7602, 51.09 Pence Sterling, 90.81 Yen and 69.59 Euro cents.
Economic news due out today
Reserve Bank of Australia: April interest rate decision
Australian Bureau of Statistics: Retail trade data for February
ANZ Banking Group (ASX:ANZ): Job advertisements series for March
Federal Chamber of Automotive Industries: New car sales figures for March
RBA interest rate forecasts
National Australia Bank Limited’s (ASX:NAB) economic team believes the outcome of today’s board meeting is close to a 50:50 bet. NAB says April is looking likely for the RBA to ‘pull the pin’ but May might be a more preferable time for the RBA to cut rates and revise its forecasts. The bank believes it is more a matter of when rates will go down rather than ‘will they’. Shares in National Australia Bank rose 0.67 per cent on Thursday to end the shortened trading week at $38.69.
AMP Limited’s (ASX:AMP) AMP Capital says the RBA is expected to cut the cash rate by 0.25 per cent today. Chief Economist Dr Shane Oliver has conceded it is a close call but also highlighted a 21 per cent fall in the iron ore price since the RBA’s last meeting. Dr Oliver believes this adds urgency to the case for cutting rates amid a subdued outlook for growth and strong Australian dollar. Shares in AMP rose 1.08 per cent on Thursday to end the shortened trading week at $6.54.
Ex-dividends
BlackWall Property Funds Limited (ASX:BWF) paying a 1.3 cent fully franked dividend
Japara Healthcare Limited (ASX:JHC) paying a 5.5 cent unfranked dividend
Commodities
Gold has gained $17.70 to $US1,219 an ounce for the June contract on Comex.
Silver has risen $0.40 to $17.11 for May.
Copper has eased $0.02 to $2.72 a pound.
Oil has lifted $3.00 to $US52.14 a barrel for May light crude in New York.
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