The Australian sharemarket is likely to more than make up its prior day losses by opening higher on Tuesday ahead of an expected rise in official interest rates amid continued uncertainty about the Middle East war.
The ASX 200 is expected to firm by 0.76% when the Australian Securities Exchange (ASX) opens at 10:00 am AEDT (11:00 pm GMT Monday) with the March futures contract last quoted 66 points over the prior settlement at 8,646 points at the time of writing.
The catalyst for the anticipated rebound was a stronger night on Wall Street where stock prices ended sharply higher, particularly companies related to artificial intelligence (AI), and helped by lower oil prices.
The Dow Jones Industrial Average rose 0.8%, the S&P 500 added 1%, and the Nasdaq Composite jumped 1.2%.
News that social media giant Meta planned large layoffs boosted not only its price but that of other AI stocks.
Crude oil prices eased after the United States said it would be "fine" for some Iranian, Indian and Chinese ships to move through the Strait of Hormuz, a crucial oil transport route which Iran is trying to close as its war with the United States and Israel continues.
"You've got news that Iranian oil tankers are moving through, or are soon going to be moving through, the Strait of Hormuz, which is a positive for global economic stability," U.S. Bank Wealth Management Chief Equity Strategist Terry Sandven was quoted as saying in a Reuters story.
"But on balance, the path forward is filled with twists and turns. ... There's lack of visibility when the conflict is likely to end."
The Australian sharemarket had sunk to a three-month low on Monday due particularly to lower mining company share prices, with the ASX 200 Index ending down 33.7 points or 0.4% at 8,583.4.
This was the lowest close since 10 December and came despite six of the benchmark’s 11 sectors finishing higher during the session.
The major economic news today will be the latest decision by the Reserve Bank of Australia (RBA), which is expected to announce a 25 basis point increase in the official cash rate to 4.10% at 2.30 pm AEDT (3.30 pm GMT).
The subsequent statement explaining the decision and news conference by RBA Governor Michelle Bullock will be closely watched for indications of the next move in rates, with many expecting another hike in May.
Stocks in focus include those going ex-dividend, like SEEK (ASX: SEK) and Reece (ASX: REH).
In fixed interest markets, yields on two Australian Government bonds rose 0.20% to 4.542% as 10 year rates dropped by 0.04% to 4.956%.
