Markets positive ahead of RBA rates call

Markets are pointing to a positive start to the week as investors prepare for the RBA’s rates meeting on Tuesday.

Markets are thought to have already priced in an expected lift to the cash rate on Tuesday, with futures markets tipping a positive open to trading in the wake of a higher close on Friday.

The corporate focus will be on annual profit results for two of the big four banks, with Westpac releasing earnings on Monday followed by NAB on Thursday, with high-profile annual general meetings to be held by Star Entertainment, Myer and Seven West Media.

Troubled investment house Magellan will front shareholders on Wednesday.

Futures markets were pricing in a lift in the S&P/ASX 200 of 1.31 per cent to 6997.5 points at the start on Monday’s trade.

There was a broader sharemarket rebound last week as investors were buoyed by signs that the US economy was resilient in the face of higher rates from the US Federal Reserve.

The Reserve Bank will meet on Tuesday to determine whether to push rates to their highest level since April 2012, with an expected rise of 25 basis points from the current 4.1 per cent.

AMP chief economist Shane Oliver said while last week had seen a positive return for markets, upsets could still surface.

“The ride for shares is still likely to remain volatile for a while yet,” he said.

Dr Oliver said questions remained around the outlook for key drivers of the global economy, including China’s property market, while elevated bond yields were still pressuring sharemarket valuations.

“It’s hard to see bond yields falling much in the near term given where central bank policy rates are, and if they do central banks might start tightening again,” he said.

“Investor sentiment is yet to fall to levels associated with major market bottoms (not that it always has too).”

Wall Street stocks rallied on Friday after US data showed jobs and wages growth slowing, with the broadbased S&P 500 up 0.9 per cent at 4358.3 points.

The Dow Jones Industrial Average climbed 0.7 per cent to finish at 34,061.32, while the tech-heavy Nasdaq Composite Index rose 1.4 per cent to 13,478.28.

Additional reporting: AFP