Australia: Shares unchanged ahead of central bank expected 50 bps rate hike

AUSTRALIAN shares drifted within a tight range on Tuesday as investors took a cautious stance ahead of a Reserve Bank of Australia (RBA) meeting where investors are widely expecting a rise in the key cash rate by half a percentage point.

The S&P/ASX 200 index was up about nine points at 6,622.00 by 0050 GMT. The benchmark had gained 1.1 per cent on Monday.

The RBA is likely to raise its key policy rates by 50 basis points, according to a Reuters poll, in an effort to temper down inflationary pressures, matching the US Federal Reserve’s 75 basis point hike in mid-June.

“We look for the RBA to repeat June’s comment that the board expects to take further steps in the process of normalising monetary conditions,” analysts from Australia and New Zealand Banking Group said in a research note.

The Australian central bank’s policy meeting outcome is due at 0500 GMT on Tuesday. Energy stocks strengthened 1 per cent as concerns of a tightening supply of crude outweighed fears of a looming global recession, with sector heavyweights like Woodside Energy and Santos climbing 1.3 per cent and 1 per cent respectively.

Miners rose 0.8 per cent despite a fall in iron ore prices. Index majors like Fortescue Metals Group and BHP Group gained 0.4 per cent and 0.5 per cent respectively.

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Australia: Shares rise as banks gain ahead of RBA meet

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Separately, Guinea’s government has ordered all work related to the Simandou iron ore mine project – in which Rio owns about 4 per cent stake – to be halted after parties involved in the project missed a deadline to agree on a joint venture.

Financials were the laggards for the day, with three out of the “Big Four” banks dropping 0.9 per cent to 1.3 per cent. Domestic technology and healthcare shares rose 1.5 per cent and 0.7 per cent, respectively.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index was flat. REUTERS