Market Wrap: RBA Holds Rates as ASX Go Back in Black

Good Evening,

Welcome to Equity Espresso’s Daily Market Recap. Markets staged a comeback, with all sectors turning greener than a freshly watered lawn, while the RBA kept rates steady and warned they'll "do what is necessary"—central banker speak for "don't get too comfortable with those mortgage rates." Let’s jump in.

Local Market

Markets bounced back today, clawing back some of yesterday’s losses, with the S&P/ASX 200 index climbing 81.8 pts or +1.04% to finish the session at 7,925.20. In a mirror image of yesterday, all 11 sectors rose, led by the Real Estate (+2.11%) and Utilities (+1.91%) sectors, with strong gains from Goodman Group (+2.67%), Stockland (+2.25%) and Origin Energy (+2.66%).

Today’s biggest news event was the Reserve Bank of Australia (RBA) maintaining the cash rate at 4.10%. It noted that while underlying inflation continues to moderate in line with forecasts, they remain cautious about the outlook.

The Board indicated that monetary policy is restrictive and well-positioned to respond to international developments that might affect Australian economic activity and inflation. The Board said its priority remains to return inflation to target sustainably and will do what is necessary to achieve that outcome.

The statement highlighted several uncertainties affecting their decision. While private domestic demand appears to be recovering and real household incomes have increased, some businesses report difficulty passing on cost increases due to weak demand. The labour market remains tight despite a February decline in employment. International uncertainties, including recent U.S. tariff announcements impacting global confidence and pronounced geopolitical concerns, are also significant.

All in all, a slightly more ‘hawkish’ view from the governor this month, with the impending U.S. tariffs adding extra uncertainty, saying tariffs could send inflation either higher or lower.

Markets now suggest a 75% probability of a 25bps rate cut to 3.85% in May, down from 77% before the policy meeting. Traders expect a total of 66bps in rate reductions this year, compared to 71bps previously anticipated.

Gold rose again, printing fresh record highs of US$3,140/oz while also passing A$5,000 for the first time. Brent crude futures jumped to around $US74.90/bbl, extending gains and hitting its highest level in a month after President Trump suggested imposing "secondary tariffs" on Russian oil exports if Putin refuses a Ukraine ceasefire.

Economic Data

• Australian Retail Sales grew by 0.2% month-on-month in February 2025, after a 0.3% rise in January and softer than market expectations of a 0.3% gain.

• The China Caixin Manufacturing PMI index increased to 51.2 in March 2025, up from February 50.8 and beating market expectations of 51.1, marking the highest read since last November.

• Germany's Consumer Price Inflation slowed to 2.2% in March 2025, marking the lowest rate since November 2024, in line with market estimates.

• U.S. Chicago PMI rose to 47.6 in March 2025 from 45.5 in the prior month and better than market expectations of 45.2.

Outlook

US Futures are trading lower this afternoon, with the S&P 500 (-0.32%) and NASDAQ (-0.38%) down similar levels.

Here’s what’s on the economic calendar in the next 24-48 hours (day references local time)

Tuesday

• Eurozone: CPI (Mar), Unemployment Rate (Mar), Manufacturing PMI (Mar)

• United Kingdom: Manufacturing PMI (Mar), House Price Index (Mar)

• United States: Nonfarm Employment (Mar), ISM Manufacturing Prices (Mar)

Wednesday

• Australia: Building Approvals (Feb)

• United States: “Liberation Day” aka Tariffs, Weekly Jobless Data, Nonfarm Employment (Mar)

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