Australia: Shares end higher on commodity boost; RBA hikes key rate

AUSTRALIAN shares closed higher on Tuesday (Jul 5), lifted by commodity stocks, while the Reserve Bank of Australia (RBA) raised its cash rate by 50 basis points (bps) and offered a less hawkish view than what some investors had hoped for.

The country’s central bank raised its cash rate for a third straight month to 1.35 per cent and flagged more tightening ahead as it struggles to contain surging inflation.

The S&P/ASX 200 index rose 0.3 per cent to 6,629.30 at the close of trade, extending its gain from Monday’s 1.1 per cent rise.

“Today’s 50 bps (hike) was in line with expectations and with quarterly inflation numbers out this month, there is a case for more rises coming in July and August,” Peter Esho, co-founder at Wealthi, said.

Official data on consumer price inflation for the second quarter is due on Jul 27 and is expected to show another alarming rise to 6 per cent or more — levels not seen since a national sales tax was introduced back in 2000.

“We’re of the view that the cash rate will rise to around 2 per cent-2.25 per cent by the end of the year,” he added.

Gold stocks led gains to close up 2.4 per cent, tracking rise in gold prices. Sector heavyweights Northern Star Resources and Newcrest Mining climbed 2.4 per cent and 1.35, respectively.

Energy stocks advanced 2.2 per cent after concerns around tight supply of the commodity shadowed fears of a looming global recession.

Sector majors Woodside Energy Group and Ampol advanced 3.8 per cent and 1.1 per cent, respectively.

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RBA raises interest rates in quickest tightening on record

Financials erased losses to climb 0.3 per cent after the central bank’s announcement. However, shares of three of the so-called “Big Four” banks ended lower, while Westpac was flat.

New Zealand’s benchmark S&P/NZX 50 index rose 0.9 per cent to finish the session at 10,965.17 points. REUTERS