Australia Market gains after RBA points to more cuts

The Australian equity market closed higher on Tuesday, 18 June 2019, as risk sentiments underpinned on tracking positive lead from Wall Street overnight and as minutes from the Reserve Bank of Australia's (RBA) last policy meeting pointed to the possibility of another interest rate. Market gains were, however, capped amid a wait-and-see mood ahead of the outcome of the U.S. Federal Reserve's two-day policy meeting starting later in the day. At closing bell, the benchmark S&P/ASX200 index inclined 39.09 points, or 0.6%, at 6,670 points, while the broader All Ordinaries added 38.49 points, or 0.58%, at 6,647.93.

The US market ended modestly higher on Monday, amid investor caution ahead of a highly anticipated Federal Reserve meeting, which is expected to give further hints about what would be the central bank's first rate cut in more than a decade. On Wall Street, the Dow closed up 0.1% at 26,112.53. The Fed raised rates nine times over the last three and a half years as the economy recovered and put millions of Americans back to work. But President Donald Trump's aggressive tariff policies have shaken confidence and some central bankers have begun to acknowledge a chill in the air.

The Fed, facing fresh demands by US President Donald Trump to cut interest rates, begins a two-day meeting later on Tuesday. The central bank is expected to leave borrowing costs unchanged this time but possibly lay the groundwork for a rate cut later this year. Focus is now on how close the Fed could be to cutting interest rates amid the raging US-China trade war, signs of the economy losing steam and pressure by President Trump to ease policy.

In the minutes for its latest RBA policy meeting, the Reserve Bank of Australia said it will likely have to cut rates further to boost the economy. The bank cut its benchmark interest rate earlier this month, driving up equities on the prospect of earning better yields.

Meanwhile, on the U.S.-China trade front, hundreds of businesses stateside are attempting to send a message to U.S. President Donald Trump's administration to discourage them from increasing tariffs on China. That comes as U.S. Commerce Secretary Wilbur Ross says Trump is perfectly happy to impose new tariffs on China if the two economic powerhouses don't make a deal.

CURRENCY NEWS: The Australian dollar fell to a fresh five-month low against the U.S. dollar on Tuesday after minutes from the RBA's June meeting showed the central bank thinks it may have to ease policy again to push down unemployment and revive wages and inflation. The central bank cut rates to a record low of 1.25% at its meeting earlier this month, to support the slowing economy. The Australian dollar changed hands at $0.6836 after seeing highs around $0.688 yesterday.

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