Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Cautious tone expected leading into RBA decision

10.05 AEDT, Tuesday 4 December 2012

Cautious tone expected leading into RBA decision

By Ric Spooner (Chief Market Analyst, CMC Markets)

The unexpected sub 50 read on the US manufacturing index is likely to set a softer tone in early trade today as investors wait on the outcome of the RBA meeting.

The weaker than expected US manufacturing index followed softer Australian data yesterday in the form of retail sales and company profits. These figures serve to remind investors that the growth outlook is at best moderate as economies sail into the 2013 headwinds of fiscal drag and in, Australia’s case, lower mining investment activity.

Building approval statistics due this morning will provide a final read on the state of the economy prior to the RBA meeting. A lower print today for October would still be consistent with trend growth since late last year given that it follows strong increases in the previous 2 months. While approvals have picked up since earlier in the year, the RBA will be looking for the housing sector to do better than recent levels to take up some of the slack anticipated from lower mining investment.

The risk for short term traders today is skewed to the downside if the RBA fails to cut rates. Today’s decision comes after a strong rally since mid-November. This leaves the market vulnerable to a sell off if it the news is disappointing. The consumer discretionary sector has performed strongly since mid-November, but could come under pressure if rates are not cut. Yesterday’s retail sales figure indicates ongoing consumer caution and investors are likely to be nervous about this sector if rates are not cut.

If rates are cut today there is likely to be investor support for relatively high yielding stocks with a defensive earnings stream as the incentive to switch out of cash and fixed interest investments grows. While consumer discretionary and industrial stocks will be assisted by a rate cut, the impact of lower interest rates on spending is likely to be moderate given household focus on balance sheet repair.

© Scoop Media

Business Headlines | Sci-Tech Headlines


Trade: NZ Trade Deficit Widens To A Record In September

Oct. 27 (BusinessDesk) - New Zealand's monthly trade deficit widened to a record in September as meat exports dropped to their lowest level in more than three years. More>>


Animal Welfare: Cruel Practices Condemned By DairyNZ Chief

DairyNZ chief executive Tim Mackle says cruel and illegal practices are not in any way condoned or accepted by the industry as part of dairy farming.

Tim says the video released today by Farmwatch shows some footage of transport companies and their workers, as well as some unacceptable behaviour by farmers of dragging calves. More>>


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


International Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news