Australian shares look set to head in the likely direction of official interest rates on a day where eyes are fixed on the Reserve Bank of Australia (RBA).
Lower United States stock prices have set the scene for a fall in the Australian Securities Exchange's (ASX) main price indicator with an 0.5% drop flagged by ASX futures trading ahead of the market opening at 10 am AEST (12 pm Monday).
The S&P/ASX 200 share price index (SPI) September contract was trading 47 points below the previous settlement at 8,526 points, at the time of writing.
As a 25-basis point cut in the cash rate to 3.60% is widely expected to be announced by the RBA at 2:30pm AEST today, there may be more interest in the commentary that accompanies the monetary policy decision.
U.S. President Donald Trump rattled financial markets by announcing large tariffs against trading partners including Japan and South Korea on Monday (Tuesday AEST), sending U.S. stock indices down sharply.
The Dow Jones Industrial Average and the Nasdaq Composite each dropped 0.9% while the S&P 500 slipped by 0.8%.
“Markets had been telling us that peak tariff risk is behind us, but to have tariffs back in the forefront is causing some skittishness," Manulife John Hancock Investments Co-Chief Investment Strategist Emily Roland was quoted in a Reuters story as saying.
The Australian share market had finished lower on Monday as investors remained cautious ahead of the RBA announcement with the S&P/ASX 200 index edging down by 0.2%.
On Australian fixed interest markets, Australian Government bond yields fell with 10-year rates losing 0.71% to 4.199% and two-year rates dropping 0.27% to 3.272%.
