11 February 2019
Bassanese Bites: RBA to cut rates – Week beginning: 11 February 2019
Global stocks were largely flat last week, with the main “new news” being concerns over progress in US-China trade talks – following President Trump’s revelation that the two leaders won’t meet again in person ahead of the March 2 “deadline” for a deal to be done or new tariffs would be imposed. The US earnings season continued to progress well enough, though there’s increasing focus on a weakening earnings outlook for 2019. Elsewhere, Germany reported another month of weak industrial production, adding to the pall over the European economic outlook.
In Australia, the major event was the shift to a neutral policy bias from the RBA, following global growth concerns and a run of weaker local economic data (such as building approvals and business confidence). For the record, I also shifted my call from the RBA being on hold “for the foreseeable future” to an expectation of two rates cuts by early 2020 – with the first potentially as early as August.
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