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The ASX closed modestly higher on Tuesday in a session that was entirely about one thing: the RBA. A split 5-4 decision to raise the cash rate by 25 basis points to 4.1% initially sent the dollar and bond yields lower as the narrow margin cast doubt over the path ahead, but banks and materials held the index in positive territory, though it wasn’t a convincing rally.
The RBA pulled the trigger, but just barely. Five members voted to hike, four voted to hold, and the market read that split as a handbrake on future tightening. The three-year yield fell from 4.58% to around 4.53% and the AUD slipped from ~US70.80¢ to ~US70.60¢ in the minutes after the decision. Governor Bullock was clear in her presser that the Middle East conflict and associated oil spike were not the trigger — the domestic economy was already running too hot before the Iran war began. The hike was about excess demand and above-target underlying inflation.
On the forward path, she was deliberately non-committal, it’s too early to call this front-loading, and the close vote leaves the May meeting live.
- ASX 200: 8,614 / +34pts / +0.40%
- AUD/USD: 0.7074 / flat / +0.04%
- Best sectors: REITs +1.07%, Materials +0.96%, Financials +0.62%
- Worst sectors: Energy −0.61%, Consumer Discretionary −0.88%, IT −1.22%
- National Australia Bank (NAB) +0.85% moved first among the majors, announcing a 25bp increase in variable mortgage rates effective March 27, with the rest of the banking sector expected to follow suit.
- NewHope Corp (NHC) -6.42% fell after first-half earnings fell on weaker realised coal prices despite management reaffirming full-year production guidance.
- Westpac (WBC) +1.39%, Commonwealth Bank (CBA) +0.34%, ANZ (ANZ) +0.21% and Macquarie (MQG) +0.88% all firmed on the back of the hike.
- Catalyst Metals (CYL) +7.64%, Westgold Resources (WGX) +4.87%, Bellevue Gold (BGL) +4.28% led a recovery across the gold sector after the brutal selling yesterday.
- Clarity Pharmaceuticals (CU6) -6.08% fell despite being up as much as +14% early on new clinical data for its cancer detection drug.
- Telix Pharmaceuticals (TLX) +6.56% bounced after early weakness tied to its FDA resubmission process.
- BHP (BHP) +1.10%, Rio Tinto (RIO) +0.31% and Fortescue (FMG) +1.32% edged higher as materials stabilised, though the China iron ore restriction dynamic remains the key overhang.
- IperionX (IPX) +3.91% bounced after losing more than 40% across the prior four sessions, with management clarifying the mechanics of its US Department of Defense grant funding.
- Temple & Webster (TPW) −7.59% was the worst performer in the ASX 200 as technology and growth stocks weakened in response to higher rate expectations.
- WiseTech Global (WTC) −3.00%, Xero (XRO) −1.72%, SiteMinder (SDR) −3.12%, and Pro Medicus (PME) −2.69% were also hit on the rotation out of growth.
- Lynas Rare Earths (LYC) −4.62% retreated following last week’s strong run after its US Department of Defense supply agreement, with profit-taking the dominant driver.
- Electro Optic Systems (EOS) −16.98% fell after the CEO revealed plans to sell up to 2.5 million shares, with other management personnel also flagging selling following option exercises.
- Oil rose +2.8% around $US103/barrel.
- Gold held around $5,000/oz at our close.
- Asian markets: China –0.2%, Hong Kong +0.6% and the Nikkei +0.4%.
- Global Futures: S&P 500 E-Mini –0.2%, Dow E-Mini -0.2%, FTSE +0.1%.
