AU Q1 CPI preview and what lies ahead for the ASX200

It’s been a relatively quiet start to the trading week with QLD, SA, WA, and New Zealand all out for public holidays, in lieu of Anzac Day.

Australia

Offering traders an opportunity to assess whether last week’s equity market volatility was a glimpse into what lies ahead for the ASX200 in May, a month that over the past decade has averaged a 3% pullback.

Against the backdrop of another huge week for metals as copper surged +3.7% to close at a two-month higher at $9551 p/t. Outshone by a +4.1% price rise in iron ore, which closed at $US185.10 p/t, just below the 10 year high it hit earlier in the week of $187.50 p/t.

The subject of surging commodity prices brings us around nicely to the hot topic of rising inflation, ahead of this week's most notable domestic macro data release, Australian Q1 CPI.

The expectation is for headline inflation to rise by 1.0% q/q, taking the y/y rate to 1.5%. The RBA’s preferred measure of inflation, the trimmed mean is likely to come in at 0.6% q/q and 1.4% y/y. Both measures of inflation are expected to remain below the RBA’s target band of 2-3%, although above the RBA’s inflation forecasts from February.

Presuming, the CPI numbers don’t come in much higher than the expectations outlined above, they are unlikely to shift the thinking behind the RBA’s current monetary policy stance. The story of higher inflation numbers that have the potential to create headlines and rattle markets is one for Q2, with a +4% print not out of the question, due to base effects.

Learn more about trading indices

As such, the expectation remains for the ASX200 to continue to push towards trend channel resistance, currently near 7120/30ish, into the end of April/early May. From here, allow for a 3-5% pullback to develop towards the band of support between 6900 and 6770.

From this support zone, it is anticipated the uptrend will resume, looking for a test and break of the all-time high of 7197.2.

AU Q1 CPI preview and what lies ahead for the ASX200

Source Tradingview. The figures stated areas of the 26th 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


More from ASX

Disclaimer

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.