Wednesday, May 2, 2012

RBA cuts, ASX200 headed for test of old highs

- Australian RBA cuts 50 basis points yesterday to 3.75% - a bit of a delayed response, but we may see AUD/USD getting more in-line.
- US ISM rises unexpectedly to 54.8 - and sp500 rises 8 points last night.
- Oil looks poised to move higher.

The lowering of interest rates is a positive catalyst on a few fronts - one is strictly for valuations of asx equities become more favourable in DCF with the lower interest rates, and the consumers will feel more compelled to start spending around this new stimulus - which is both a psychological lift as well as financial.