Australian stocks rebounds from 7-week low as RBA minutes hint near-term rate pause

AUSTRALIAN shares rebounded from a near seven-week low on Tuesday after minutes from the Reserve Bank of Australia signalled a wait-and-watch approach following three interest rate hikes this year.

The benchmark S&P/ASX 200 index rose 1.2 per cent to 8,604.70 points after a 1.5 per cent drop on Monday.

“The RBA minutes today offered markets a modest sign of relief, with policymakers acknowledging that policy is already sitting in restrictive territory after three hikes this year,” Hebe Chen, market analyst at Vantage Market said.

“Traders interpreted the tone as less urgent and less aggressive in the near term... A near-term pause now looks increasingly likely, but that does not mean another hike is off the table.”

Minutes of the RBA’s May board meeting indicated that the central bank regards current monetary policy as adequately restrictive, giving it room to observe the impacts of the Iran war amid growing inflation and slowing growth. Markets priced in a hold in June and an around 60 per cent chance of a hike in August.

Sarah Hunter, RBA’s assistant governor, said that fears of higher energy costs lifting consumer prices quickly was one reason why the central bank raised interest rates for a third time this year to 4.35 per cent in May, fully reversing the amount of policy easing made in 2025.

Financials rose more than 1.7 per cent, with the big four banks up between 1.3 per cent and 2 per cent.

Industrials gained 1.2 per cent and real estate stocks climbed 1.8 per cent.

Meanwhile, the consumer staples sub-index climbed 3 per cent to a one-week high, helped by a 3.7 per cent jump in Woolworths after JPMorgan upgraded the stock to “overweight”.

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Miners fell 0.2 per cent tracking the weakness in the commodity prices. Bellwethers BHP Group and Rio Tinto lost 0.1 per cent and 0.2 per cent.

Defying a slump in oil prices after the US paused a planned attack against Iran to allow room for negotiations, energy stocks extended gains for the third straight session, rising 0.5 per cent to a near two-week high.

New Zealand’s benchmark S&P/NZX 50 index rose 1.7 per cent to 12,974.32 points. REUTERS