Futures point north ahead of Q3 wage growth numbers

The ASX200 reversed a 0.36% gain from Monday, fell 0.67%, and ended the day at 7,420.44.

There were no major stats from Australia to point any direction that day, so the minutes of the RBA’s monetary policy meeting took center stage.

Despite continued assurances of the status quo in interest rates through 2024, the minutes revealed concerns about inflation that weighed on the day.

The statistics

However, some of the salient points from the RBA meeting minutes included:

• Outbreaks of the delta variant led to a sharp coll -se in the Australian economy in the September quarter.
• This delayed the economic recovery that had started in the first half of the year, but did not derail it.
• By mid-2022, the Board of Directors expects the activities to be broadly in line with the pre-delta recovery path.
• Household consumption was expected to support output growth in the following quarters as restrictions are relaxed.
• Inflation in the September quarter was about 0.25 percentage points higher than expected three months earlier.
• Members noted that the central scenario expects underlying inflation to gradually pick up towards the end of the forecast horizon.
• Although the inflation forecast was higher than before, members noted that the inflation outlook in Australia is different from that of many other advanced economies.
• However, members agreed that the distribution of possible inflation outcomes had widened.
• Given the significant persistent uncertainty surrounding health outcomes and household consumption, two alternative scenarios were considered.
  • A stronger economic trend than in the central scenario would be possible if households expanded their spending more than expected.
  • In addition to possible negative health consequences, such as the emergence of a new COVID-19 variant or the declining effectiveness of vaccines in H12022, a weaker course could be due to precautionary savings.
• Members admitted that the risks to the inflation forecast had changed.
• The greatest uncertainties related to the persistence of current disruptions in global supply chains and wage behavior at the lowest unemployment rate in decades.

The market movers

It was a bearish day for the banks. SN – led down with a decline of 0.58% Macquarie group and Westpac with losses of 0.33% and 0.35% respectively. CBA and ANZ ended the day with a minus of 0.31% and 0.18%, respectively.

Commodity stocks also had a bearish session. Rio Tinto and BHP group ended the day with losses of 2.23% and 2.59% respectively. Fortescue Metals Group Ltd slipped 0.31%, with Newcrest Mining decreases by 0.98%.

Other Asian markets

It was a bullish day elsewhere. The Nikkei 225 and CSI300 rose 0.11% and 0.02%, respectively, while the Hang Seng gained 1.27%.

The day ahead

A relatively calm day is ahead on the Australian economic calendar. Q3 wage growth numbers will be in focus this morning.

With the RBA putting a heavy emphasis on consumption, expect a lot of market sensitivity to the numbers.

We can also expect market reaction to US retail sales overnight. The October numbers showed no immediate impact from rising consumer prices. Retail sales increased 1.7% for the month, with core retail sales also increasing 1.7%. Economists had forecast more modest increases of 1.2% and 1.0% respectively.

Off the economic calendar, expect the markets to continue to react to commodity price movements throughout the session.

The future

On the futures markets, the ASX200 was up 33 points at the time of writing.

You can find an overview of all today’s economic events in our economic calendar.