Rate cut on horizon amid fears of more stock | Australian Markets

Investors laid low with weeks of tariff turmoil will hope for a quiet return from Easter as mortgage holders eye a charge cut on the horizon.

Stocks in Australia and the US have clawed back ground up to now fortnight after US President Donald Trump hit pause on most components of his trade struggle.

But continued uncertainty and the tariff story solely half-told means it’s too early to say the low in US, world and Australian shares has been handed, AMP Capital chief economist Shane Oliver says.

He pointed to “renewed fears” the White House may begin to threaten the independence of the Federal Reserve.

Amid separate court docket actions to broaden the president’s energy to sack unbiased regulators, Mr Trump late final week mentioned Fed chair Jerome Powell’s sacking can not “come fast enough”.

“Any threat to Fed independence would further threaten faith in the US as a safe haven and lead to renewed market stress,” Dr Oliver mentioned.

“(It would lead to) even more upwards pressure on US bond yields and downwards pressure on the (US dollar) as investors would demand a higher risk premium to invest in the US.

“This in flip will increase the risk of US financial turmoil and US recession.”

But for the real estate mogul trying to blow up the global trading system, markets this year could have been celebrating inflation being brought back under control with limited damage to economic growth, Dr Oliver said.

Underlying inflation figures released last week were lower than expected in Canada, the UK and New Zealand.

Eyes will be on Australia’s next set of quarterly numbers on April 30 amid expectations underlying inflation has fallen back inside the Reserve Bank’s target band.

The annual rate leapt out of the two-to-three-per-cent range in early 2022, triggering 12 rate rises in 13 months.

Along with AMP, NAB is tipping trimmed mean inflation has eased to 2.8 per cent.

That will help set the scene for a rate cut at the Reserve Bank’s May 20 meeting.

“We assume the tariff shock is finally disinflationary for Australia,” NAB senior markets economist Taylor Nugent said.

“Unlike some central banks, we do not assume the RBA is constrained by inflation and so might be proactive in responding to world headwinds.”

Noting “exceptionally elevated uncertainty” globally, NAB is preparing for a double-sized cut of 50 basis points.

That would slice $204 off the monthly repayments for the average Australian mortgage ($642,000 over 30 years).

A week bookended by Easter and Anzac Day leaves little space for local economic indicators, with April business conditions the only of note.

Australian markets – up about nine per cent since the darkest day of the trade war on April 7 – were expected to claw back further ground.

The ASX200 rose 172.6 points or 2.26 per cent last week to 7819.1 while the broader All Ordinaries lifted 2.14 per cent to 8021.9.

The SPI/ASX 200 futures over Easter weekend were pointing to a 0.6 per cent rise in early trade on Tuesday.

But that may change with US markets tipped to retreat 0.8 per cent on open on Easter Monday (Tuesday AEST).

Investors may even watch for Tesla outcomes out Wednesday Australian time forward of Boeing (Thursday) and tech giants Alphabet and Microsoft (Friday).