ASX200 gets on the front foot ahead of tomorrow's RBA meeting minutes

Research
Tony Sycmore
By : ,  Market Analyst

In Australia, the RBA minutes to be released tomorrow will be examined for more detail around how the bank sees the war in Ukraine impacting the economy.

If Governor Lowe's comments at the RBA Business Summit last week are a guide, the RBA appears to be slowly pivoting towards a hawkish stance, concerned more about upside risks to inflation than the negative impact on growth from higher petrol prices.

The interest rate market is fully priced for a June rate hike, the first since November 2010, followed by another four rate hikes before the end of 2022.

Turning to the Australian stock market, the ASX200 fell 0.7% last week to close at 7064, which sounds dull given the volatility in markets elsewhere. However, there were some notable moves at a sector level under the hood.

After a good run, higher profit-taking in commodity facing stocks saw the Materials Sector finish the week down 3.4%, while the influential Financial Sector found favour to close 2.2% higher.

As a result of the war in Europe, the benchmark UN index of world food and agricultural prices has surged to a multi-decade high as war threatens crops from Europe's vital grain-growing regions and as governments worldwide scramble to secure food supplies and curtail food exports. 

Reflecting this dynamic and following a bullish trading update today, agribusiness company Elders (ELD) is the day's best performing stock, trading +12.33% higher today at $13.48. At the time of writing, the ASX200 is trading up 1% at 7134.

Since February 24th (the date of the Russian invasion of Ukraine), the ASX200 has traded within a 250-point range between 7200 and 6950. A sustained break of either of these levels is required to guide future directionality.

ASX200 daily chart Mar 14

Source Tradingview. The figures stated areas of March 14th, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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