ASX 200 reacts to an RBA 25bps rate hike by… closing somewhat firmly in the green?

Colour me surprised – the ASX200 successfully priced something in for once, with today’s RBA rate hike not scaring the market down into red territory. For a country that sold off the last time a widely expected hike decision was executed, this Market Link finance journalist was caught out by the price action on Tuesday arvo that seemed to accept with uncharacteristic stoicism the reality Oz faces.

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Perhaps the Iran war has been such a shock to so many – or perhaps fuel prices – that everybody is collectively willing to take some bruising to get this over and done with. (As I said earlier today, the RBA are going to have to intervene eventually – may as well tear off the bandaid, seeing as it’s inevitable.)

Or it could be that we’ve already lost nearly -4% over the last trading month, and that enough is enough, and the general zeitgeist is thinking we’ve already priced in the negative effects this hike will have over the last two weeks.

As always, a mix of both lines of thinking remains the likely culprit. And probably a thousand other angles I haven’t considered, but largely, the oil price already being priced in.

A bit of a non-event, really, on this Tuesday afternoon. Is this the start of the market recovery? Goldman Sachs said a fortnight ago it would take markets a fortnight to digest the Iran war. Well, it’s been a fortnight, the RBA just hiked, and the ASX is closing green. That’s gotta be a buy signal, surely.

At the time of writing – at 4pm SYD on Tuesday – the U.S. futures are flattish red after three weeks of pain over on Wall Street (three weeks ago, due to ongoing volatility in tech, then the Iran War), so what the U.S. do overnight will be watched (and this finance journalist expects those futures to flip green.)

But that’s a ballsy claim, of course – especially because Donald Trump has been increasingly talking about invading Cuba in the last ~72 hours.

But it definitely feels like the worst is behind us Down Under. Y’know, assuming no more surprises. But at this point, it feels like they’d need to drop the big kahuna to really rattle markets more than they already are.

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