Australia: Shares steady as central bank seen less hawkish on future rates
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AUSTRALIAN shares recouped from early losses to end steady on Tuesday (Aug 2) after the country’s central bank tempered its stance on aggressive interest rate hikes, while weak performances in commodities capped risk sentiment.
The S&P/ASX 200 held its ground at 6,998.1 points. The benchmark closed 0.7 per cent higher at 6993 points on Monday.
The Reserve Bank of Australia (RBA) raised key cash rates by 50 basis points to 1.85 per cent for the third straight time, in tandem with a Reuters poll, but adopted a lesser-hawkish guidance as it forecast a slowdown in the economy.
“The RBA will most probably be on a wait-and-watch mode before making big rate hikes to see the impact of previous increases so that the economy does not slip into a recession,” said Kunal Sawnhey, chief executive officer at Kalkine Group.
Financials traded higher, with 3 of the “Big Four” banks gaining between 0.3 per cent and 1.2 per cent.
The RBA statement was not as hawkish as anticipated and the lower growth forecasts indicate that the bank is aware of drags to the economy, said Kerry Craig, global market strategist at JPMorgan.
Technology stocks gained nearly 1 per cent, with Xero and Computershare climbing 1.1 per cent and 0.3 per cent, respectively.
Shares of A2 Milk surged more than 12 per cent after a media report that an approval for the company to sell baby formula in the US was imminent. Trading was later halted, while A2 dismissed the report.
Miners were the main laggards, dropping as much as 2 per cent, on prospects of additional steel production cuts in China as inclement weather conditions in Asia’s largest economy hit construction activity.
Energy stocks followed suit, slipping 0.9 per cent, as they tracked lower Brent crude prices in Asian trade.
Index heavyweights Woodside Energy and Santos fell 0.8 per cent and 1.9 per cent, respectively.
New Zealand’s benchmark S&P/NZX 50 closed flat at 11,532.5 points. REUTERS
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