SYDNEY, May 4, 2026, 03:04 (AEST)
- ASX 200 futures suggest a weaker start on Monday, ahead of the Reserve Bank of Australia’s rate decision set for Tuesday.
- According to a Reuters poll, 30 out of 33 economists are betting on a 25 basis point increase, lifting the cash rate to 4.35%.
- Fuel remains the key variable here, with March CPI up 4.6% on the year and automotive fuel prices surging 32.8% for the month.
Australian stocks open the week with the Reserve Bank of Australia—not earnings—calling the shots. The ASX looks set for a soft start Monday, as traders position themselves ahead of a likely third consecutive rate hike on Tuesday, a move widely anticipated by both markets and economists.
The local equity market just clawed back some ground on Friday after a tough stretch, but one thing’s unresolved: Will oil-driven inflation keep borrowing costs elevated? That’s still hanging over rate-sensitive banks, property plays, and consumer stocks—right at the heart of the action.
The cash market hadn’t opened at the dateline. On the ASX, regular trading picks up at about 9:59:45 a.m. in Sydney and continues through 4:00 p.m.—so traders get a few hours before seeing the week’s initial local price move.
The Reserve Bank of Australia will release its decision statement and Statement on Monetary Policy at 2:30 p.m. AEST Tuesday, with a media conference following an hour later at 3:30 p.m. The cash rate—Australia’s overnight benchmark—guides broader borrowing costs. A shift of 25 basis points moves the rate by a quarter percentage point.
An April 27-30 Reuters poll found most respondents betting the RBA hikes the cash rate to 4.35%, but over a third of economists anticipated rates jumping to 4.60% or even higher before year-end. AMP’s My Bui was direct: “inflation is basically too high in Australia.” Reuters
Inflation left the RBA boxed in, with little chance to ease up. According to the Australian Bureau of Statistics, annual CPI jumped to 4.6% in March—the strongest print since September 2023. Automotive fuel surged 32.8% from February. The same set of numbers showed March-quarter CPI climbing 1.4%. Trimmed mean, which filters out volatile swings, posted a 0.8% gain.
With oil prices pulling back, buyers stepped in Friday. The ASX 200 advanced 0.7% to close at 8,730, and the All Ordinaries tacked on 0.8% to finish at 8,955. Miners carried much of the load, offsetting the drag from banks, where ANZ slipped despite delivering higher profits.
The mining outlook is a mixed bag. BHP, Rio Tinto and Fortescue are still moving in step with both Chinese demand and local interest rates. China’s manufacturing PMI stuck just above the expansion line at 50.3 in April, with new export orders notching their highest since April 2024. “The export outlook is very important,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, pointing out that domestic demand is still weak. Reuters
Banks are split on where rates will top out. ANZ, CBA and NAB see the peak at 4.35%, but Westpac is calling for 4.85%, Reuters reports. Just last week, ANZ Chief Executive Nuno Matos warned that extended oil supply constraints could shift the crisis dynamic, turning it from an inflation problem into what he called a “supply and growth challenge.” Reuters
Not every global signal is negative. Both the S&P 500 and Nasdaq finished Friday at fresh records, lifted by robust earnings and softer crude. The Dow shed 0.31%. According to Reuters market data, Brent crude was last at $109.20—a level that keeps eyes on the fuel trade in Australia.
Oil’s still the wild card. On Sunday, OPEC+ signed off on a 188,000 barrel-a-day quota hike for June, though Reuters noted the bump looks mostly symbolic for now, with the Strait of Hormuz still snarled. “Control despite limited physical impact,” said Rystad’s Jorge Leon, reading the signal from the group. Reuters
But it’s not all one-way traffic. Should the RBA signal it thinks the petrol spike has run its course—or if its statement lands with less of a hawkish punch than the rate hike itself—rate-sensitive stocks might find support. IG analyst Tony Sycamore notes the argument for a pause grows if the Board judges the “acute phase” of the shock is over. Another oil jump, though, and the picture turns: thinner margins, pressure on households, and the RBA’s job just gets tougher. Reuters
The calendar’s packed through the week. Westpac points to upcoming reads on Australia’s household spending, dwelling approvals, and the goods trade balance; China’s RatingDog services PMI is also on deck, not to mention U.S. jobs numbers. Any of these could jolt bonds, the Aussie dollar, or the heavyweight exporters.
On the ASX, the rate move alone probably won’t cut it. Sure, some of the hike is baked in, but what matters now is how the RBA sees oil-driven inflation rippling into wages, rents, company expenses. That’s what’ll tell investors if Friday’s rebound was just a breather—or the beginning of a real shift.
