The much talked about discussion these days has been the latest move by the US Federal Reserve on interest rate which has been raised by 25 basis points. Fed also forecasted for two more rate hikes in 2017 and highlighted that the economy is doing well. The rise in the US interest rates boosted the Australian dollar that rose about 2 per cent against the greenback on March 16, 2017. Further, oil prices and commodities such as iron ore have got a boost. This triggered a stock price surge for many miners. On the other hand, the dovish decision has led to a drop in global bond yields and this has impacted the banks negatively.
Given the fact that the Australian banks obtain a good amount of funding from overseas, there might be a chance that the Reserve Bank of Australia (RBA) considers about raising the interest rates as well, in effect to the Fed’s move. This comes at the back of the notion that the RBA’s move is generally in line with the US Federal Reserve’s move.
On the other hand, the probability of such a move by RBA seem to have been bleached by the latest figures on Australia’s February unemployment scenario which has indicated for an unexpected rise in unemployment. On seasonally adjusted estimates, the employment has decreased 6,400 to 11,998,800 while full-time employment increased 27,100 to 8,158,900 and part-time employment decreased 33,500 to 3,840,000. The seasonally adjusted unemployment rate increased 0.2 pts to 5.9 per cent (unemployment increased 26,000 to 748,100). Thus, Australia’s Reserve Bank may hold the official rate at 1.5 per cent for the rest of the year at the back of key domestic economic parameters.
.png)
Australia’s Labour Force February 2017 (Source: Australian Bureau of Statistics)
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in: BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.