The S&P/ASX 200 (ASX: XJO) finished broadly flat on Tuesday, struggling to find direction after the long weekend in the US.
Materials remain the biggest drag on the index as steel production curbs in China continue to push shares in Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO) lower by 3% and 2%, respectively.
The ASX tech sector also underperformed, with Appen Limited (ASX: APX) and Nearmap Ltd (ASX: NEA) both dropping over 3% as inflation expectations continue to increase.
Flight Centre Travel Group Ltd (ASX: FLT) was a standout, jumping nearly 6% as the NSW Premier continues to outline the way out of COVID lockdowns hinting at their own ‘Freedom Day’.
RBA expects economy to ‘bounce back’
But it was all about the Reserve Bank of Australia on Tuesday who held their September meeting. Many economists had been predicted a reversal of the $4 billion weekly bond-buying that had seen the central bank purchase as much as $200 billion worth of state and commonwealth government bonds since the beginning of the pandemic.
They were proven wrong, with Governor Lowe confident that the economy will bounce back from virus lockdowns afflicting the two most populous states and confirming the ‘tapering’ of purchases would go ahead as expected.
The RBA did, however, put the decision around further tapering of purchases on hold until at least February 2022. They noted some sectors of the economy were booming, those supported by governments, with many others struggling but expects this to “delay” not “derail” the recovery; we can only hope. The cash rate target was held steady at 0.10%.
Featured video: Modern Monetary Theory explained
Guinea production continues
Guinea is the home of a number of mines central to the production of aluminium. Rio Tinto’s Simandou project is located there.
News this week about a military coup sent the aluminium price to decade highs but reports now suggest the mining sector has been exempt from curfews and strict controls. The region is incredibly important, producing half of all bauxite consumed by Chinese refineries.
Active management delivers
Passively managed, index following strategies have gained in popularity in recent years, benefitting from the strong performance of the benchmark, but the tables may be beginning to turn.
According to Standard & Poor’s research, some 55% of all active equity funds outperformed the benchmark despite it returning 27.8% for the financial year.
ASX 200 today
According to SPI futures, the ASX 200 is expected to open lower on Wednesday. This comes following a soft lead from US markets overnight.
