ASX200 closing in on 12 month high despite RBA caution on housing
Tony Sycamore April 6, 2021 2:06 PM
At this afternoon's RBA Board meeting the RBA as expected, kept its key monetary policy settings unchanged including the target of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of its bond purchase program.
The RBA reiterated that it does not expect to raise interest rates until inflation returns to within the 2-3% target band for a sustainable period, as well as the need for a stronger labour market and higher wages growth. Conditions that it estimates are unlikely to be achieved until 2024 at the earliest.
There was some speculation in the lead-up to today's meeting that the RBA might intensify its commentary surrounding the booming Australian housing market. This proved to be spot on as the RBA sounded a warning note on lending standards in the paragraph below.
“Given the environment of rising housing prices and low-interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”
Despite this, following a strong overnight lead from offshore equity markets, including a third straight session of NASDAQ outperformance as alluded to last week here, the ASX200 has enjoyed its best day since early March, to be trading at 6896.50, +67.80pts or 0.99% at the time of writing.
Technically, today's break above the band of resistance coming from the four highs in March near 6860ish is a positive development that has the ASX200 within one good session of testing the February 2021, 6938 high. A break above 6938ish would then allow the ASX200 to extend its rally towards the top of the trend channel, currently near 7050.
On the downside, near-term support at 6860/40 should hold to keep today’s short-term break higher intact. To keep the medium-term bullish bias in place, the ASX200 has no right closing below trendline support 6710/00ish.
Source Tradingview. The figures stated areas of the 6th of April 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.