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ASX200 subdued ahead of RBA call
00:00, 03 December 2013
The ASX200 is on the back foot again this morning, following soft international leads overnight. In the US, markets closed slightly lower. The ISM Manufacturing PMI read bettered expectations, which in turn prompted renewed concerns over an early stimulus wind down. There was also an element of profit taking, as traders begin to reset positions ahead of the all-important US non-farm payrolls later in the week. Locally, the RBA’s interest rate announcement and accompanying statement is the focal point today. Due at 2:30pm, the rate is widely tipped to remain on hold at 2.5%. As always, the language of the statement will be heavily scrutinised for clues on the central bank’s longer term agenda. There is no doubt the recent demise of the AUD will please Governor Stevens, who has been doing his best to talk the local unit into submission. This chatter may continue this afternoon, with the central bank likely to reiterate its ‘easing bias’. However, whether or not further easing will actually eventuate remains to be seen. There is also the ABS Monthly Retail Sales figures and the September Current Account data to be considered. The former has come in slightly above par, while the latter slightly below. With the Australian market at a six week low, and investors still wary of stretched valuations, it is doubtful these figures will reinvigorate local sentiment. The more likely scenario is for equity activity to remain subdued pending a bigger impetus, such as the release of Friday’s US employment data. By William Leys (Sales Trader, CMC Markets)