Australian share prices are expected to nudge lower on Wednesday in the wake of the shock decision to leave interest rates steady and after a weaker close in New York (NY).
The S&P/ASX 200 share price index (SPI) September contract was trading eight points below the previous settlement at 8,571 points at the time of writing.
This followed the Reserve Bank of Australia’s surprise announcement on Tuesday that it would leave the official cash interest rate unchanged at 3.85%, although a 25-basis point cut was widely expected.
“It certainly won't help sentiment although yesterday we did see the ASX 200 pare losses and close flat after the RBA's decision so markets have just delayed their expectations for rate cut to August now,” Chief CommSec Economist Ryan Felsman said.
He said the interest rate swaps market was implying an 88% chance of a drop next month once the central bank had seen more evidence inflation was under control.
A bigger influence on the ASX today would be the fall in gold futures with the prices of producers of the previous metal expected to weaken.
The market will also be guided by the performance of U.S. markets which ended mixed on Tuesday (Wednesday AEST) amid confusion about tariff outlook based on statements from President Donald Trump.
While the Dow Jones Industrial Average lost 0.4% and the S&P 500 dipped 0.1%, the Nasdaq Composite finished 0.03% in the black.
Trump appeared to broaden his global trade war by promising a 50% tariff on copper and reiterating that levies on semiconductors and pharmaceuticals were coming soon.
The Australian share market ended almost flat on Tuesday after learning of a rate outcome that was different to forecasts, with the S&P/ASX 200 Index gaining 1.40 points to 8,590.70.
Given the focus on monetary policy, a speech by RBA Deputy Governor Andrew Hauser this morning to mark the centenary of the Economic Society of Australia was expected to get more attention than it would have otherwise.
On the Australian fixed interest markets, Australian Government bond yields fell with 10-year rates losing 0.02% to 4.314% and two-year rates dropping 0.41% to 3.377%.
