PM 28 Sep 26: Caution ahead of likely RBA rate hike?

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Why are investors on edge ahead of tomorrow’s RBA rate decision?

Laura Besarati 0:02
Alisna Production
Steve Daghlian 0:05
The Aussie market snaps a losing streak with a cautious lift as a busy week kicks off.
Laura Besarati 0:10
And investors are holding their breath for the RBA's rate decision tomorrow afternoon.
Steve Daghlian 0:14
Good afternoon, I'm Stephen Duglin.
Laura Besarati 0:16
I'm Laura Besserati. It's Monday, the
Steve Daghlian 0:18
28th of September. Welcome to the Comsec Market Update.
Laura Besarati 0:23
We started very formally this week. Steven Daglian. There you go. Steven, you usually say Steve or Stevie. There you have it. Thanks for noticing. Thanks for
Steve Daghlian 0:30
noticing, uh Laura. But um it's been an interesting start to the week for the Aussie market, hasn't it?

What does the Bloomberg survey say about the likelihood of a fourth RBA hike?

Steve Daghlian 0:35
I mean, we're up very slightly uh today, the ASX two hundred lifting by around a fifth of one percent. We were up by about half a percent a bit earlier, and then we've kind of faded over the uh the entire afternoon. That's because there's a lot happening this week.
Laura Besarati 0:49
There is a lot happening and I think tomorrow is going to be the most important day of the entire week, locally at least, with that RBA decision being handed down two thirty PM Sydney time. Now there's roughly a ninety three percent chance that we will see interest rates being hiked for the fourth time this year. So I think if we get anything else, that would be pretty much a surprise to markets, right? If we get anything but a hike.
Steve Daghlian 1:11
Exactly. And there are twenty nine economists surveyed by Bloomberg as well, and all of them are expecting a rate hike tomorrow.
Laura Besarati 1:17
We might see a cautious start to the day tomorrow as well, of course, depending what happens on Wall Street tonight, but likely to be a bit of a cautious start to the day tomorrow as well ahead of that decision. And then of course investors will be waiting after that to hear from Michelle Bullock when she uh fronts the media at her press conference. Uh, she usually comes out and does a a bit of a spiel to, you know, explain why the board made the decision that they did. And then she takes questions. Questions from the media. Sometimes they are some juicy ones and you might get a few clues as to what could be ahead for interest rates.

How are recent US‑China tariff cuts influencing Australian market sentiment?

Steve Daghlian 1:49
Yeah, so I think that's going to receive a lot of attention, what's signaled for the future. And then a day later on Wednesday, we've got that inflation update as well. Just a day too late, perhaps, as far as influencing this decision tomorrow, but it is going to be important. Five weeks out from the next decision in early November on Melbourne Cup Day. There's going to be a lot of other data handed down between now and then. Then we've got manufacturing data in China on Wednesday, jobs data in the United States on Friday and A number of public holidays across Asia as well later in the week. And that's going to keep the Chinese markets closed Thursday, Friday and into early next week as well. But even though we've managed to see a little bit of a lift today, as you say, quite a bit of caution in markets.
Steve Daghlian 2:27
And we've got to remember we've had four straight weeks of declines on the Aussie market. And some of that has had to do with concerns of higher rates globally and also the US Iran conflict, which is continues to uh keep oil prices Volatile and investors guessing.
Laura Besarati 2:41
Volatile is definitely the word there. As you mentioned, we did have four straight weeks of decline. So that means in September so far, we're down about four and a half percent almost, with a couple more days to go.

Which sectors are driving today’s market moves – financials up, materials down?

Laura Besarati 2:52
So I guess what happens in the next few sessions will really determine how we do end the month. If we do end lower, which is likely considering uh, you know, if we're gonna recoup more than four percent in two days, that would be quite significant. Um, but if we do end Lower. That would be the second monthly decline of the year because, of course, we are coming on the heels of five straight months of improvements for the Aussie market. Now, of course, a lot of attention is on uh the US and Iran war, but we did have, you know, a meeting between the US and China over the weekend. So we were hopeful that something was gonna come out of that. And there was some positive news on the trade front over the

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