Rate-hike pause bolsters Australian share market

William Ton |

The local share market has secured its longest daily winning streak in over a year, bolstered by the Reserve Bank’s decision to keep interest rates on hold for the first time in 11 board meetings.

The benchmark S&P/ASX200 index closed on Tuesday up 13 points, or 0.18 per cent, to 7,236, while the All Ordinaries rose 15.1 points, or 0.2 per cent, to 7,431.5.

The Australian market notched its first seven consecutive days of gains in over a year after closing in the positive.

Tiger Brokers Australia chief investment officer Brett Reynolds said ASX sectors were near their all-time highs but comments from the central bank’s governor had dampened stronger gains.

“The market didn’t rally much more because of the outlook comments that (RBA governor Philip) Lowe gave: ‘don’t think rates are coming off’,” he told AAP.

The Reserve Bank’s decision to keep interest rates at 3.6 per cent in April is the first pause since May 2022.

However, analysts believe the reprieve could be short-lived with factors such as oil, business input and housing prices still trending in the wrong direction.

Interest rates could rise again by the middle of the year, Mr Reynolds said.

“While the rate of inflation is easing, it is still incredibly high. The RBA will continue to seek to bring inflation under three per cent,” he said.

EY chief economist Cherelle Murphy characterised the RBA’s decision as a “hawkish pause”.

“It’s pausing for now, but it’s certainly not saying, ‘relax, we’re done’,” she told ABC TV.

Reserve Bank governor Philip Lowe conceded interest rates could again rise should inflation get out of control.

“The decision to hold interest rates steady this month provides the board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty,” he said in a statement.

Nine of the ASX’s official 11 sectors rallied to finish the day in positive territory with energy and tech stocks leading the way.

Brisbane-based battery technology company Li-S Energy saw its share price rocket by 27.45 per cent after a breakthrough in its battery product.

The company has been able to boost the amount of energy stored in its new lithium sulphur battery by 45 per cent in a development which might lead to smaller battery sizes.

Shares in NSW-based Whitehaven Coal were up 5.7 per cent to $7.28, while New Hope rose 4.7 per cent to $6.06 a share.

The energy sector’s heavy hitters Woodside Energy and Santos ended the day with gains of 0.5 per cent and 1.8 per cent respectively.

Software company Xero increased 1.8 per cent to end on $92.35 per share.

The materials sector recorded the sharpest fall among the group, dropping about three-quarters of a percentage point at the close.

BHP led the losses among the mining giants, falling 2.2 per cent to $45.94. Rio Tinto declined 0.9 per cent while iron ore miner Fortescue finished 0.7 per cent in the red.

Bank stocks rallied to finish in the green but there were mixed fortunes among the big four banks. NAB ended the day up 0.6 per cent and ANZ staged a late comeback to end the day up 0.2 per cent after welcoming the consumer watchdog’s scrutiny of its Suncorp acquisition.

Westpac closed 0.4 per cent lower, the steepest drop of the big four banks, while CBA was down 0.3 per cent.

Job-listing company Seek closed 0.95 per cent lower at $23.98 after slashing its 2023 financial year revenue forecast by about $15 million on the back of lower job ads.

The Australian dollar closed the day slightly down from its highest point in more than a month, buying 67.56 US cents, from 66.87 US cents at Monday’s ASX close.

ON THE ASX:

* The benchmark S&P/ASX200 index finished Tuesday up 13 points, or 0.18 per cent, at 7,236.0.

* The broader All Ordinaries gained 15.1 points, or 0.2 per cent, to 7,431.5.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 67.56 US cents, from 66.87 US cents at Monday’s ASX close

* 89.76 Japanese yen, from 89.28 Japanese yen

* 62.06 Euro cents, from 61.76 Euro cents

* 54.47 British pence, from 54.32 pence

* 107.31 NZ cents, from 107.37 NZ cents

AAP