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Australian share market books worst session in six weeks as RBA hits pause

Jack QuailNCA NewsWire
As household borrowers breathed a sigh of relief as the RBA held off on another rate hike, the Aussie share market had its worst daily result in more than a month. NCA NewsWire / Monique Harmer
Camera IconAs household borrowers breathed a sigh of relief as the RBA held off on another rate hike, the Aussie share market had its worst daily result in more than a month. NCA NewsWire / Monique Harmer Credit: News Corp Australia

Despite the Reserve Bank hitting pause on its rate tightening cycle, the Australian share market sank on Tuesday, dragged lower by energy and mining stocks.

The RBA held rates steady at 4.35 per cent at its last board meeting for 2023, a move that was widely anticipated by economists and markets alike.

Westpac chief economist Luci Ellis said the rates pause would give the central bank more time to assess its monetary tightening to date, however, it would be alert if price pressures proved more resilient than expected.

“… the Board will be focused on the December quarter CPI result,” Ms Ellis said in a note to clients.

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“If inflation does not decline as the RBA intends, the Board will respond with increased rates. But this is not the most likely outcome.”

RBA
Camera IconWhile the RBA granted borrowers an early Christmas present, markets did not fare so well. Photo by:NCA Newswire Credit: News Corp Australia

“The Board would be aware that further rate increases from here will have much of their impact at least a year from now – by which time inflation should already be at or close to target.”

Even as it clawed back some gains after the RBA decision, the benchmark S&P/ASX200 shed 0.9 per cent, or 63.1 points, to reach 7,061.6 at the closing bell. The broader All Ordinaries lost a similar amount, dropping to 7,269.8.

The Australian dollar was lower, buying US65.81c, down 0.6 per cent, at the end of trading.

The market’s performance, which was the worst daily result in six weeks, follows a weak lead on Wall Street overnight where the Dow Jones index shed 0.1 per cent.

Meanwhile, the S&P 500 dropped 0.4 per cent and the tech-heavy Nasdaq plunged 0.8 per cent.

Locally, energy stocks were the worst performers, losing 2.1 per cent as global crude oil prices held on to losses recorded on Monday. With markets remaining sceptical of the effectiveness of OPEC+ cuts to crimp supply, Brent crude neared $US78 a barrel.

Energy sector giants Woodside sank 2.7 per cent to $29.53 and Santos fell 0.9 per cent to $6.76.

Utilities stocks were the top performers on the benchmark. The sector was buoyed after former takeover target, Origin Energy, rebounded 2.2 per cent to $8.03.

Origin Energy rebounded on Tuesday as its largest shareholder, AustralianSuper, offered funding to wean the company off coal and gas. supplied.
Camera IconOrigin Energy rebounded on Tuesday as its largest shareholder, AustralianSuper, offered funding to wean the company off coal and gas. supplied. Credit: Supplied

It follows a meeting of shareholders on Monday afternoon, where a $20bn offer lobbed by Brookfield and EIG was rejected. AustralianSuper, the energy retailer’s largest shareholder who led opposition to the takeover bid, has offered a capital injection for the energy retailer to progress its transition away from coal and gas.

In other company news, Rio Tinto said on Tuesday it had approved $77 million for the pre-feasibility study to progress development of the Rhodes Ridge project, located in East Pilbara. Shares dropped 1 per cent to $125.60.

Evolution Mining went into a trading halt ahead of a $525 share placement as it attempted to raise funds to purchase an 80 per cent stake in Northparkes, a gold and copper mine located in NSW. The deal is expected to be worth $US475 million.

Customers at Westpac suffered from an eight hour outage of online banking services overnight. Starting at 9pm on Monday, services were ultimately restored shortly after 5pm, with the banking giant blaming a “routine technology update” for the mishap. Shares edged 0.1 per cent higher to $21.42.

Originally published as Australian share market books worst session in six weeks as RBA hits pause

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