Australia’s domestic share market defied mixed market pressures to close in positive territory on Tuesday, even after the Reserve Bank of Australia (RBA) held its official cash rate steady at 4.35 per cent while retaining a clear hawkish bias that opens the door to future rate increases. Geopolitical instability in the Middle East, which has driven up global commodity prices, also failed to derail the day’s modest gains for Australian equities.
The benchmark S&P/ASX 200 index advanced 18 points, or 0.19 per cent, to settle at 9250.60, while the broader All Ordinaries index climbed 19.60 points, or 0.21 per cent, to end the session at 9443.70. Against the U.S. dollar, the Australian dollar traded largely flat, holding at 70.55 US cents by market close.
Despite the overall market uptick, sector performance was deeply split: only five of the 11 tracked industry sectors finished the day in positive territory, while six closed lower. Energy stocks emerged as the clear top performer, surging 3.91 per cent overall amid a global rally in crude oil prices. Major Australian energy producers posted strong single-day gains: Woodside Energy rose 3.84 per cent to close at $33.01, Santos jumped 5.36 per cent to $8.06, and fuel retailer Ampol gained 3.38 per cent to finish at $39.80.
The rally in energy and commodity prices stemmed from growing geopolitical uncertainty surrounding the Strait of Hormuz, a critical global shipping chokepoint through which nearly 20 per cent of the world’s oil supplies pass. Rising tensions driven by Iranian demands for a swift reopening have clouded the outlook for regional stability, pushing global commodity prices higher. Brent Crude added 0.7 per cent to settle at $US87.72 per barrel, while gold extended a recent winning streak to climb 0.4 per cent to $US4404 per ounce, following a 3.6 per cent gain across the prior two trading sessions.
Gold mining stocks reflected the split market sentiment, with mixed results despite the rising precious metal price. Evolution Mining gained 0.73 per cent to $13.82 and Newmont jumped 2.83 per cent to $163.99, while Northern Star Resources slipped 0.87 per cent to close at $22.81. Healthcare stocks were another standout gainer on the day, led by major biotech and medical firms: vaccines giant CSL rose 2.87 per cent to $138.33, sleep apnea device maker ResMed surged 3.79 per cent to $31.23, and medical imaging firm Pro Medicus gained 3.24 per cent to end at $182.33.
The RBA’s decision to leave the cash rate on hold provided modest support to equities, but the central bank’s accompanying policy statement and press conference from Governor Michele Bullock made clear that further rate hikes remain on the table if inflation fails to continue cooling. AMP chief economist Shane Oliver noted that the RBA board retains the same hawkish stance it held in June, with Bullock confirming that policymakers considered both a hold and a rate hike at this month’s meeting, compared to only considering a hold at the June gathering. “RBA remains hawkish, noting that the Board ‘will raise rates further if required’ which is as hawkish as back in June,” Oliver explained. “And she said something to the effect that ‘personally, we might need to hike further.’”
Following the release of the monetary policy update, market expectations for a rate hike as soon as September jumped sharply, rising from just 15 per cent to nearly 50 per cent.
Individual stocks posted dramatic one-day moves on Tuesday, driven by company-specific news. Safety technology firm Life360 plunged 19.44 per cent to $23.75, even after the company reported record second-quarter results that included $22 million in advertising revenue and monthly active users surpassing 100 million for the first time, hitting 102.4 million. Mortgage insurer Helia defied weak earnings to rally 10.16 per cent to $5.64, despite reporting a 25 per cent year-on-year drop in statutory net after-tax profit to $100 million.
Defence shipbuilder Austal was one of the day’s biggest winners, rocketing 17.45 per cent higher to $4.51 after announcing it had received a takeover offer from Hanwha Defence USA valuing the business at between $US1.05 billion and $US1.2 billion ($A1.49 billion to $A1.70 billion). On the downside, diversified industrials, energy and media group SGH slumped 10.27 per cent to $41.58 after reporting flat underlying net profit of $920 million and issuing a weak near-term outlook for the next 12 months. The company did note that its medium-term prospects remain supported by strong long-duration demand from Australia’s $1.7 trillion five-year national infrastructure pipeline.