Australian share prices are expected to open strongly higher on Tuesday on a day highlighted by a key interest rate decision by the Reserve Bank of Australia (RBA).
The ASX 200 index is likely to start 1.15% above the previous close, according to Australian Securities Exchange (ASX) futures trading, which quoted the March share price index contract 101 points over the previous settlement at 8,833 points at the time of writing.
Once the market opens at 10:00 am AEDT (11:00 pm GMT Monday), all eyes will be on the RBA, which is expected to announce a 25 basis point rise in the official cash rate to 3.85% at 2:30 pm.
The ASX’s RBA rate tracker indicated a 72% probability of a 25 basis point increase on 2 February.
In the United States, the three major equity indexes closed higher despite a slide in precious metals and bitcoin prices and boosted by gains in chipmakers and other companies related to artificial intelligence.
The Dow Jones Industrial Average increased 1.1%, the S&P 500 put on 0.5% and the Nasdaq Composite gained 0.6%.
Prices for smaller stocks also rose sharply as investors often view gains in small-cap stocks as a reflection of confidence in the economy.
"The fundamentals are good and earnings are strong. We have positive surprises both for revenues and earnings, pretty much across the board," Ingalls & Snyder Senior Portfolio Strategist Tim Ghriskey was quoted as telling Reuters here.
The Australian sharemarket had fallen sharply on Monday, losing 1% to 8,778.6 points as eight of the 11 sectors finished in negative territory amid heavy selling of mining stocks on the back of dropping gold and silver prices.
In other news, the results of the latest ANZ-Roy Morgan Consumer Confidence survey will be announced at 9:30 am AEDT, while the Australian Bureau of Statistics will issue building approvals data at 11:30 am.
Also in focus will be banking stocks, which were mixed on Monday ahead of the RBA’s rate decision.
In fixed interest markets, Australian Government bond yields rose with two-year rates adding 0.96% to 4.216% and 10 year rates gaining 0.72% to 4.822%.
