RBA Decision Next Week: 2 ASX Stocks to Buy Before February 3

ASX Stocks to Buy Before the RBA Decision

The Reserve Bank of Australia meets on February 3, and investors are nervous. Wednesday’s inflation numbers could decide whether the RBA keeps rates at 3.60% or raises them for the first time in over a year. Bank stocks have already dropped 3-4% this month as worry takes hold. But here’s the thing: when everyone is scared, good stocks get cheap. We think two names look attractive right now, and both could do well no matter what the RBA announces.

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Why Fear Is Creating Opportunity

Right now, Australia’s big banks can’t agree on what happens next. CBA and NAB expect a rate hike in February. Westpac and ANZ think rates will stay put.

Inflation sits at 3.4%, still above the RBA’s 2-3% target. Jobs data show unemployment at just 4.1%, meaning the economy hasn’t slowed much.

But here’s what matters: the market has already priced in this fear. Stocks have fallen. Sentiment is weak. If the RBA holds rates steady, we could see a quick relief rally. If the RBA hikes, banks benefit because they can charge more on loans. Either way, buying quality stocks now makes sense.

Westpac (ASX: WBC) – Best Value Among the Big Banks

Westpac (ASX: WBC) trades around A$38.70, about 5% below its 52-week high of A$41. The stock has pulled back even though the company delivered strong returns last year. The discount is your opportunity.

Why Westpac over the other banks? It comes down to how they make money. Westpac has more everyday transaction accounts than its rivals. When rates rise, these accounts don’t immediately pay higher interest to customers, but Westpac can charge more on loans straight away. This gap boosts profits.

The valuation also looks reasonable. Westpac trades at roughly 19 times earnings, well below CBA’s expensive 25 times. You still get a fully franked dividend yield of around 4%, plus the bank holds plenty of capital to handle any bumps ahead.

Our view: Westpac offers the best risk-reward among Australia’s big four banks right now.

Northern Star (ASX: NST) – Gold Protection for Uncertain Times

Gold has been on fire, pushing to record highs above US$5,100 per ounce this week. Northern Star (ASX: NST), Australia’s biggest gold producer, gives you direct exposure to this rally.

The stock closed at A$27.60 on Friday, just below its 52-week high of A$27.99, after gaining more than 70% in the past year. We see the recent pause as healthy. The company has $616 million in net cash and mines gold across Western Australia and Alaska.

Gold works well when uncertainty rises. If the RBA surprises markets, gold benefits. If global tensions continue or inflation stays sticky, gold wins again. J.P. Morgan expects gold to maintain levels above US$5,200 per ounce later this year, which provides further tailwinds for Northern Star’s margins.

Our view: Northern Star offers quality gold exposure and works as insurance for your portfolio.

The Bottom Line

Here’s the simple truth: you don’t need to guess what the RBA will do. Westpac wins if rates rise and rallies if fears ease. Northern Star wins if uncertainty sticks around. Together, these two stocks give you exposure to both outcomes.

The best time to buy is when others are selling. Currently, fear is running the show, and that’s precisely when savvy investors step in. Wednesday’s CPI data will give us early clues, but the opportunity exists today. Don’t wait for certainty. By the time everyone agrees on the direction, the prices will have already moved.

Disclaimer: This article is general information only, not financial advice. Do your own research before investing.