RBA Preview: ASX200 makes nervous gains

As shocking as events are in Europe, there is only minimal direct trade between Australia and Russia. Hence the focus of traders will be on any changes of language in the Board's statement that accompanies the decision.

The RBA may note that while wages growth has picked up, further increases are needed to put the inflation rate sustainably with the RBA’s 2-3% target band before it considers raising rates.

While the RBA has been at pains to stress its patient approach, it’s taken the shocking turn of events in Europe last week for the interest rate market to push back its expectations for the timing of the RBA’s first-rate hike to the second half of 2022. 

During February, a consistent stream of solid domestic corporate earnings insulated the ASX200 from European geopolitical tensions until Russia’s full-scale invasion of Ukraine last week, triggering a -3.1% fall in the local bourse.

In nervous trading today, news that Ukraine has agreed to talks with Russia has revived slim hopes that a diplomatic solution can be found and helped the ASX200 to a 0.57% gain at the time of writing to be trading at 7038, eyeing a slight rise for February.

Unsurprisingly based on Russia’s and Ukraine’s unique status as commodities and energy-exporting powerhouses, energy and mining stocks have outperformed.

South32 (S32) and BHP Group (BHP) are both trading over 3.7% higher, closely followed by Rio Tinto (Rio), which is up 3.37%, trading at $118.45. Going the other way, Fortescue Metals (FMG) is trading -2.34% lower after going ex-dividend today. 

Some positive news for consumer discretionary stocks as retail sales for January increased by a punchy 1.8%, easing concerns that the Omicron outbreak would impact consumer sentiment and the re-opening. Harvey Norman is trading 1.84% higher at $5.25.

Source Tradingview. The figures stated areas of Feb 28, 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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