Australia: Shares end lower after RBA decision; miners, banks drag

[BENGALURU] Australian shares fell on Tuesday (Nov 2), dragged down by banking heavyweights and miners, after the central bank abandoned an ultra-low target for bond yields and opened the door for an earlier interest rate hike.

The benchmark S&P/ASX 200 index closed 0.6 per cent lower at 7,324.3, erasing Monday's (Nov 1) gains.

The Reserve Bank of Australia left cash rate untouched at its monthly policy meeting, but dropped a commitment to keep yields on the April 2024 government bond at 0.1 per cent, citing improving economic recovery and rising inflation.

The new economic forecasts "are a little more cautious than we had expected but certainly indicate that the board expects that conditions necessary for the first rate hike will be in place during 2023", Westpac's chief economist Bill Evans wrote.

Miners were the biggest laggards on the benchmark index, shedding more than 2 per cent as iron ore prices fell on poor demand outlook.

Index majors BHP Group and Rio Tinto were down between 2 per cent and 2.5 per cent.

Financials fell 1.3 per cent to hit their lowest since Oct 7, as insurers and the "Big Four" banks all closed lower.

Insurance Australia Group was the worst performer on the sub-index, dropping 7 per cent after it warned of higher costs due to bad weather. That dragged rivals QBE Insurance Group and Suncorp Group lower too.

Energy and gold stocks fell about 1 per cent each.

Among stocks, real estate firm Goodman Group was a bright spot, climbing as much as 7.6 per cent to hit its highest level in nearly 14 years after it raised its 2022 fiscal year earnings outlook.

Meanwhile, New Zealand's benchmark NZX 50 index fell 0.3 per cent to 12,992.5, with local shares of Westpac Banking being the top losers with a 4.7 per cent drop.

In other markets, Japan's Nikkei was down 0.4 per cent, while S&P 500 E-minis futures were down 0.1 per cent.

REUTERS