The stock market closed positively Tuesday on a day punctuated by critical moves from two major central banks and a surge in commodity prices. The ASX 200 edged up 27.4 points, concluding the session with a gain of 0.36%, whilst the All Ords (XAO) closed out the day 32.6 points (0.41%) higher.
Mining shares were central to the progress made on the index, thanks to a notable rally in iron ore prices, which soared back above the US$100 per tonne mark. The revitalized vigour in the iron ore market is seemingly due to improved demand prospects coming out of China, and hints at a potential easing of production restrictions in major economies.
In a seminal policy shift, the Bank of Japan concluded 17 years of negative interest rates while also putting an end to its unique yield curve control strategy. The messages coming out of the Bank of England (21st), and the Federal Reserve (20th) remain on the watchlist as far as central bank reports this week.
Closer to home, the Reserve Bank of Australia (RBA) opted for a steady hand, maintaining the cash rate at 4.35%, and the the interest rate paid on Exchange Settlement balances at 4.25 per cent. In a statement that offered mixed signals for the future, RBA Governor Michelle Bullock indicated that while the near-term direction of rates remains uncertain, the target of reining inflation within a manageable limit of 2–3 percent by the year 2025 is on track.
In the statement, the RBA stated is not yet confident enough to exclude the possibility of further interest rate changes. They did however reinforce the institution’s commitment to steering inflation back within the target range during the forecast period, a statement that seemed to be well-received by market participants. “Returning inflation to target within a reasonable timeframe remains the Board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment”
Top Australian Brokers
- City Index - Aussie shares from $5 - Read our review
- Pepperstone - Trading education - Read our review
- IC Markets - Experienced and highly regulated - Read our review
- eToro - Social and copy trading platform - Read our review
Individual ASX listed shares faring well through the day include those in the sector most buoyed by rising commodities prices such as iron ore, aluminium, copper, and tin as you might expect. Leading the charge were miners BHP Group (2.87%), Rio Tinto (2.48%), Fortescue Metals Group (3.59%), and Mineral Resources (3.08%) all posting significant gains on the day as momentum shifts back. What a seesaw of a last week for most of these.
Investors now face an interesting dynamic as they weigh the intentions and forecasts from central banks with the movements in pivotal sectors like resources and energy.
