Rob Talevski, CEO, Webull Securities Australia, ASX participant broker and popular trading platform, says that traders have become resilient in the face of elevated inflation and interest rates, with recent data falling short of what is required to anticipate cuts from the Reserve Bank of Australia (RBA) tomorrow.
Please see his full comments appended below for your use. If you would like to speak with Rob further, please feel free to reach out to [email protected].
Rob Talevski, CEO, Webull Securities Australia, said “Come 8 November, listed Australian companies and interest-rate sensitive sectors will have endured a full year of 4.35% peak rates during the latest interest rate cycle. Throughout the last 12 months, the ASX 200 has rallied over 16%, largely taking its direction from US stock indices, which have outperformed local stocks significantly. Over the same one-year period, the S&P 500 has risen 31% and the NASDAQ 35%.
“There are many reasons for this, but there’s no doubt higher rates—and still no hints of cuts from the RBA—have put a dampener on the exuberance of local traders. Australia is out of sync with the US – we didn’t hike as high to combat inflation, and we’re now paying the price. While the RBA has held rates at 4.35% for just shy of a year, the US Federal Reserve held an effective rate of 5.33% from late July 2023 until it cut rates by 50bps in late September 2024.
“This week’s inflation data did nothing to improve the hopes of local rate cuts, with the RBA’s Trimmed Mean CPI measure remaining well above target at 3.5%, and interest rate futures implying just a 5% chance of a 25bps cut when the RBA delivers its decision on Tuesday.
“While the quantum of moves higher on the local market may continue to be somewhat constrained by higher interest rates, the US election outcome and US equity direction will no doubt play a big part in how Australian stocks perform throughout the remainder of 2024 and into 2025.”
Key Facts:
- Australia is out of sync with the US – we didn’t hike as high to combat inflation, and we’re now paying the price.
- This week’s inflation data did nothing to improve the hopes of local rate cuts, with the RBA’s Trimmed Mean CPI measure remaining well above target at 3.5%
- The US election outcome and US equity direction will no doubt play a big part in how Australian stocks perform throughout the remainder of 2024 and into 2025
Contact details:
Cognito on behalf of Webull
[email protected]
(0) 414 143 845