Matt Haupt, Portfolio Manager at Wilson Asset Management, believes that the recent bounce in markets is a short term relief rally and expects the RBA to step in with more rate cuts later in the year. Haupt says the recent rally has been supported by short covering, flows in to defensive stocks and the Chinese Government providing stimulus for 'low productivity' industries that support commodity prices in the short term. Haupt says the RBA will be keeping an eye on the strong dollar, however, he says the real catalyst for further rate cuts is a $100 billion CAPEX hole as the resources investment cycle fully rolls over. "We really need to have the NSW infrastructure spend pick up before we see any improvements , so there will be a bit of a gap where the RBA cut rates to promote activity."
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