Australian stocks ended trade on Tuesday flat, losing much of its spectacular early gains.
The All Ordinaries was fractionally up, gaining just 0.8 points to rest at 6,126.70 when market close.
The ASX200 index ended Tuesday 1.7 points down, to sit at 6,012.90 points when trading ended.
The Reserve Bank, as expected, left the cash rate unchanged from its all-time low of 0.25 per cent. A resurgence of Covid-19 in Victoria prompted RBA governor Philip Lowe to express uncertainty about the pace of economic recovery.
“Uncertainty about the health situation and the future strength of the economy is making many households and businesses cautious, and this is affecting consumption and investment plans,” he said.
“The Australian economy is going through a very difficult period and is experiencing the biggest contraction since the 1930s.”
Shortly after the RBA statement, the Victorian premier announced a coronavirus lockout would return to Melbourne from Wednesday night.
What happened at lunchtime?
The Australian share market is up at lunchtime, although it has lost a lot of its spectacular early gains.
Local stocks dipped down mid-morning after it burst out of the gates on the back of overseas optimism.
The market will be watching for a statement from the board of the Reserve Bank at 2:30pm.
What happened this morning?
Australian shares pointed up to start Tuesday's trading session, following a sharp overnight rise on Wall Street.
The main event of interest for the Australian market will be the Reserve Bank's cash rate decision in the afternoon.
While no change to the historic-low rate is expected, commentary from the board about Australia's economy and recovery will be carefully analysed.
What happened overnight?
The United States is in the grip of a second wave of the coronavirus, but stock investors are apparently looking past it.
They were more interested in positive services industry data and signs of an economic recovery in China.
Wall St finished overnight higher, with the S&P500 now sitting more than 40 per cent higher since the virus-induced trough in mid-March.
The NASDAQ is enjoying all-time highs, having climbed another 2.21 per cent overnight. The Dow Jones Industrial gained 1.78 per cent, while the S&P500 went up 1.59 per cent.
The optimism in the US sent Australia's SPI200 futures up 0.52 per cent at 8am AEST Tuesday, pointing to the local market opening higher at the start of trade.
– with AAP