The Reserve Bank of Australia left interest rates unchanged at a record low of 2.75%. It was widely expected that RBA would do that, but many traders and market observers expect RBA will not leave rates at 2.75% for the rest of this year. However, the weak Aussie could crimp plans for additional rate cuts.
As for declining iron ore demand and prices, that is a potentially negative catalyst that cannot be overlooked with regards to EWA. BHP Billiton, the world’s largest mining company, is the ETF’s second-largest holding with a weight of 10.7%. Rio Tinto is also a top-10 holding in EWA. Making those stocks all the more vulnerable is recent news from both companies of near record levels of iron production, something that does not jibe with the spate of disappointing economic data out of China.
iShares MSCI Australia ETF
ETF Trends editorial team contributed to this article.