Investors waiting on key releases

Investors waiting on key releases

By Ric Spooner (Chief Market Analyst, CMC Markets)

Despite this morning’s firmer market opening we are likely to see a relatively subdued morning’s trading as investors wait on the release of the RBA minutes and Rio’s quarterly production report.

Last night’s miss by the US retail sales figures confirms the trend for conservative shopping behaviour throughout most of the developed economies in recent months. The June retail sales numbers are likely to see consumer spending contribute a moderate 1.5% to overall second quarter GDP growth in the US.

Similar behaviour here is likely to be one of the factors that sees today’s RBA minutes leave the door open for another rate cut next month. While asset prices and building approvals have responded to lower rates, unemployment rates are rising and business conditions remain weak. More is likely to be needed to replace the expected drag from a sharp drop in mining investment, and if the Bank is of a mind to cut, then sooner would be better than later.

There has been some support for major bank stocks in early trade in anticipation of a clear easing bias in today’s RBA minutes.

Attitudes toward resource stocks will be set by Rio’s production report. Investors will be expecting an improvement of 5-6% in Rio’s second quarter iron ore production to offset concerns over potential future price weakness.

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