THE Australian share market has opened flat as investors sit on the sidelines ahead of today’s Reserve Bank meeting and following weaker trade on Wall Street overnight.
The RBA is expected to hold rates steady at the current record low of 2 per cent, but investors will be watching for any change in Glenn Steven’s perceived easing bias.
Meanwhile, a renewed slide in oil prices saw energy stocks weaken on the local bourse, offsetting a minor lift in the financial sector.
At the open, the benchmark ASX 200 index was down 6.6 points — or 0.1 per cent — at 5037, while the broader All Ordinaries index slipped 5.9 points, also 0.1 per cent, at 5088.4.
Oil prices returned to gloom overnight as traders decided that talk of a global deal between the Organisation of the Petroleum Exporting Countries cartel and Russia to cut production was unlikely to turn into action.
US Nymex crude slumped 5.9 per cent to $US31.46 a barrel while global benchmark Brent crude shed 4.9 per cent to $US34.24.
The move lower also followed yesterday’s China data, which showed that the world’s second-largest economy’s manufacturing sector contracted in January at the fastest pace since 2012.
“For the first time in 2016 share markets and oil prices moved independently in overnight trading,” CMC Markets strategist Michael McCarthy said.
“Weaker manufacturing data in China and the US further undermined confidence in the growth outlook, leading oil traders to dump longs.”
In local economic news on Tuesday, the Reserve Bank holds its monthly board meeting and announces its interest rate decision at 2.30pm.
Rivkin chief Scott Schuberg said just eight trading days ago the market was pricing in a one-in-four possibility of a cut to 1.75 per cent, but those expectations have fallen to just 6 per cent following a jump in the official headline inflation reading.
Elsewhere, iron ore jumped 2.4 per cent to $US42.50 a tonne, further consolidating last week’s gains, while the Australian dollar was slightly stronger after the commodity’s jump, buying just under US71c in morning trade.
In Australia, the market on Monday ended the trading session higher, buoyed by gains across the board.
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