Business Daily Media

Business Marketing

.

RBA pause - investors to back tech growth stocks

  • Written by Dylan Zhang

“Today’s pause comes as welcome news to investors, but it’s unlikely this will be the last hike of the cycle. Rather than signalling that the inflation fight is over, this pause buys the RBA time to assess the upcoming quarterly CPI data on April 25 and the full impact of the banking crisis in Europe and the US.


Last week’s monthly CPI came out below expectations at 6.8%, and while inflation appears to have peaked, this is still above the target band of 2-3%. Inflation is cooling, but there’s more work needed to prevent it becoming entrenched. That said, it appears the RBA expects credit conditions to tighten due to the pressure on global banks, which could shorten the hiking cycle and lower the terminal cash rate.


Given how the RBA’s peers in the U.S. and U.K. lifted rates in recent months, today's move may be seen as a sign of fragility in the Australian economy, potentially leading to a weaker Australian dollar and subsequent inflationary pressure from imports and energy prices. However, Australia is particularly sensitive to rates due to a high percentage of people on variable mortgages, so hikes may have a bigger impact when compared to other markets. 


Following this announcement, investors will be watching the impact of the OPEC+ production cuts and China’s recovery, which are causing the price of oil to surge, potentially leading to higher costs across transport, food, and travel. Given the uncertainty over recent weeks, we’ve seen investors on Stake increase their allocation to passive index funds and gold ETFs. But as the pace of rate hikes appears to be slowing, it’s likely we’ll see more investors moving back into tech growth stocks.”


Dylan Zhang, ASX Equities Analyst at online brokerage platform, Stake

Popular

Shopper sentiment: Key insights for Australian retailers this peak season

Rarely, if ever, has peak season arrived at a better time for Australian retailers, who have spent much of the last 12 months contending with cautious consumer spending and high inflation and interest rates. Peak season and th...

Osteon Medical, Australian digital dental implant business acquired by US Keystone Dental - accelerates international growth

Osteon Medical, the Australian software-enabled dental implant-prosthetic innovator has merged with Keystone Dental Inc. (“Keystone”), the largest independent dental implant company in North America. Commenting on the deal, O...

Thryv Australia streamlines its data processing with MuleSoft Anypoint

Elise Balsillie, Head of Thryv Australia Salesforce today announced that Thryv Australia, which provides digital marketing solutions and cloud-based tools to small-to-medium sized businesses, is using MuleSoft to improve digi...