Morning Wrap: RBA Hikes Interest Rates (03.02.2026)
The latest market update reveals a mixed performance across Asian markets. While major Chinese indices experienced slight declines, Japan's Nikkei 225 futures rose over 1% towards the close, with the cash market surging more than 3%. South Korean equities also showed robust gains.
Market Highlights
- Japan's Financial Sector: The rally in Japan was driven by financial and technology sectors. Mizuho Financial Group saw a significant increase of 5% following a positive earnings report, an upgraded guidance outlook, and a new share buyback program.
- Wall Street Futures: In early trading, Wall Street futures are showing upward movement, with the US100 up 0.4% and the US500 gaining 0.25%.
- Palantir's Performance: Palantir shares surged 5% in after-hours trading after reporting a 70% year-on-year revenue increase to $1.4 billion, surpassing expectations. The earnings per share (EPS) of $0.25 also exceeded the anticipated $0.23.
- Nvidia's Decline: Conversely, Nvidia shares fell nearly 3% in after-hours trading, influenced by comments from the OpenAI CEO regarding the exploration of alternative chip architectures.
Reserve Bank of Australia (RBA) Rate Hike
The Reserve Bank of Australia has raised its cash rate to 3.85%. This decision, which was partially anticipated by the markets, led to a rise in the AUD/USD exchange rate by over 1%, recovering from a recent decline in precious metals. RBA Governor Michele Bullock stated that the Australian economy remains resilient and raised the year-end interest rate projection to 4.2% due to high inflation forecasts.
Precious Metals and Energy Markets
- Precious Metals: Precious metals have found a support level, with silver surging over 8% to reach $85 per ounce and gold climbing 5% to trade near $4,900 per ounce. Goldman Sachs noted that gold is supported by structural demand, serving as a strategic hedge for institutional investors and central banks.
- Energy Markets: Energy markets remain soft, with Brent crude trading below $66 per barrel and WTI slightly under $62. The focus has shifted from Iranian tensions to the US-India trade pact and the ongoing US government shutdown.
Geopolitical Developments
Iran has indicated a willingness to engage in nuclear talks with the US, which could lead to a reduction in the geopolitical premium currently affecting oil prices. Analysts suggest that if negotiations proceed smoothly, the $5–$10 premium could be eliminated.
US-India Trade Agreement
A historic trade agreement between the US and India will reduce tariffs on Indian goods from 50% to 18%. In return, India will lower barriers for American products and cease purchases of Russian crude, opting to increase imports of US oil. This news has led to a sharp rally in Indian equities.
Domestic Political Landscape
In the US, former President Donald Trump has called on the House of Representatives to expedite the budget bill to resolve the partial government shutdown. Additionally, the US non-farm payrolls report, originally scheduled for release this Friday, is now expected to be postponed.