FX.co ★ ASX 200 Rises on Rate Cut Expectations

The S&P/ASX 200 index climbed 0.8% to reach 8,730 on Tuesday, following a lackluster performance in the preceding session. This upward movement comes as investors keenly anticipate the Reserve Bank of Australia's upcoming monetary policy announcement next week. Market expectations are leaning towards a 25 basis point reduction, which would adjust the cash rate to 3.60% at the policy meeting scheduled for August 12. The rationale for monetary easing has become more compelling, given that core inflation moderated to 2.7% in June—comfortably within the RBA’s target range of 2–3%. Furthermore, increasing unemployment figures and sluggish wage growth have amplified rate cut expectations, with market probabilities nearly at 95%. In terms of economic indicators, the Composite PMI reached its highest reading since April 2022, fueled by an uptick in the services sector and a revitalization of manufacturing activity. The mining sector demonstrated robust performance, with BHP Group gaining 1.1%, Rio Tinto increasing by 0.9%, and Fortescue Ltd advancing 1%.