分类： business

On Tuesday, the Reserve Bank of Australia’s widely anticipated but poorly received interest rate increase sent sharp downward pressure through Australia’s equity market, pushing the benchmark index to its lowest point in three weeks. The S&P/ASX 200 dropped 16.6 points, a 0.19% decrease, to close at 8,680.50. This new 20-day low marks the index’s 10th decline over the past 11 trading sessions. The broader All Ordinaries index also ended the day in negative territory, while the Australian dollar appreciated against its US counterpart to hover around $US0.71.

Following its scheduled two-day policy meeting, the RBA announced a 25 basis point increase to the official cash rate, lifting the benchmark to 4.35%. This marks the central bank’s third rate hike this year, and policymakers signaled they remain prepared to implement additional tightening if inflation does not cool as expected. The policy decision passed by an 8-1 vote, a split that market analysts say underscores the RBA’s strong commitment to taming persistent elevated inflation.

Not all stocks moved in the same direction on Tuesday. Mining firm Capricorn Metals led top performers with a 10.76% surge, while logistics technology firm WiseTech Global also closed up 5.17%. On the losing side, electronics manufacturer Codan posted the steepest drop, tumbling 8.93%, followed by fund manager Magellan Financial Group which fell 6.77%. Across the market, seven out of 11 major sectors closed the session higher, but broad losses in rate-sensitive segments outweighed these gains and pulled the overall market into the red.

Energy stocks led sector gains, supported by global crude prices holding firmly above $US100 per barrel. In contrast, financial stocks and consumer-facing sectors faced widespread selling pressure after the rate announcement. Australia’s big four banks delivered a mixed but mostly weak performance: Commonwealth Bank posted a modest 0.15% gain, while Westpac fell 1.95%, National Australia Bank dropped 0.74%, and ANZ slipped 1.03%. The weak showing from major lenders reflects widespread investor concerns that higher rates will suppress borrowing demand and slow overall economic growth.

Tony Sycamore, a market analyst at IG, explained that the hawkish tone of the RBA’s policy statement weighed on investor sentiment throughout the trading session. The latest rate hike has now fully unwound the emergency easing the central bank implemented last year, he added, and markets have begun pricing in the possibility of additional tightening in the coming months. “At this point, you would kind of feel there is another hike coming later this year,” Sycamore noted, adding that markets currently have a September increase priced in, with discussions ongoing about whether a fourth hike could come as late as November or December.

Sycamore emphasized that the 8-1 vote result reinforces the RBA’s determination to get inflation under control, saying “the tone was noticeably more hawkish on the inflation outlook there so they’re pretty determined to control that.” Weak performance from the banking sector has become a major headwind for broader market gains, he argued, noting “it’s very hard to see the ASX 200 marching back higher while the banks are struggling and that probably is going to be a bit of an Achilles heel for us.”

The biggest long-term risk to equities, Sycamore explained, is that interest rates will remain elevated for an extended period, which hits sectors most exposed to borrowing costs particularly hard. “The financials and the consumer discretionary are two of them. And then you’ve probably got the real estate sector there, the three which are so interest rate sensitive out there,” he said. “The more that interest rates go up, the less appetite there is for credit. And that’s a big thing that will start to weigh.”

While household spending has held up relatively well through recent rate increases so far, Sycamore warned this resilience may not continue. Consumer confidence has already faded, and business confidence has remained consistently weak, he pointed out. In the coming months, household spending is likely to come under growing pressure as the combined weight of rising energy costs, persistent cost-of-living pressures, and higher interest rates squeeze household budgets. Even with the market downturn, Sycamore noted that the clear shift in rate expectations could offer markets short-term relief, as the next potential rate move is not priced in until September, allowing for a temporary pause in market jitters.

As geopolitical tensions in the Middle East send ripple effects across global supply chains, three of Australia’s four largest financial institutions have issued a coordinated warning of mounting economic pressure on domestic households, with multiple interest rate increases, soaring living costs and stalled growth projected in the coming years.

Westpac, the latest major bank to release its gloomy economic outlook alongside half-year financial results, forecasts that the Reserve Bank of Australia will implement three additional interest rate hikes for mortgage holders, with the first increase expected as early as this Tuesday. The bank projects inflation will climb to 4.6% and GDP growth will cool to just 1% by the end of December 2026, a sharp slowdown from current trend levels.

Westpac Chief Executive Anthony Miller directly tied the worsening economic outlook to ongoing conflict between Israel and Iran, noting that disrupted global energy supply chains have pushed up prices that are now passing through to both businesses and consumers across the country. “Different sectors are bearing uneven impacts from these disruptions, but the pressure is widespread,” Miller explained. He added that the bank stands ready to collaborate with the federal government to bolster Australia’s economic resilience, including continued investment in a stable, sustainable national energy system to mitigate long-term supply risks.

In its half-year results, Westpac reported a net profit of $3.5 billion when excluding one-time notable items, marking a 1% year-on-year increase from 2025 but a 1% dip over the past six months. Despite the uncertain macroeconomic landscape, the bank recorded strong growth across key lending lines: Australian business lending rose 16% over the 12-month period, while institutional lending jumped 23%. Customer deposits also grew by 7%, driven by expanding transaction account volumes, and operating expenses fell 2% compared to the previous half-year.

Miller noted that the vast majority of mortgage holders – around 85% – had built buffers ahead of the latest conflict, with payments ahead of schedule. Even so, the bank has recorded a clear slowdown in residential mortgage applications in April, signaling that fewer Australians are moving forward with home purchases amid rising borrowing costs.

Ahead of the upcoming federal budget, Miller also called for targeted national productivity reforms to maintain Australia’s global competitiveness. “We must seize the opportunity for meaningful reform to put the economy on a stronger footing for coming challenges,” he said.

Westpac’s downbeat forecast aligns with projections from two other major Australian banks, ANZ and National Australia Bank (NAB), all three of which point to the Middle East conflict as a core driver of growing uncertainty. NAB Chief Executive Andrew Irvine acknowledged that while the environment has become far more volatile, with volatility expected to persist for some time, most Australian households start from a position of financial resilience.

Like Westpac, Irvine predicts an interest rate hike will come out of Tuesday’s RBA monetary board meeting, followed by one additional increase. He noted that the central bank faces an extraordinarily difficult balancing act, as high inflation remains a persistent threat to household and business stability that must be brought under control. “The RBA has a devilishly difficult job ahead of them,” Irvine said. “Inflation is running too high and we have to get it under control. Inflation is bad for households and businesses.”

For its part, ANZ reported that most of its mortgage customers have kept up with payments so far, but CEO Nuno Matos warned that the full impact of the Middle East crisis has yet to be felt. “The longer global oil supply remains constrained, the greater the risk that this crisis shifts from primarily an inflation challenge to a broader shock that hits supply chains and overall economic growth,” Matos explained.

A fresh escalation of geopolitical friction in the Persian Gulf has sent global energy markets into a sharp upward swing, with oil prices jumping more than five percent at one point on Monday after Iran launched drone and missile attacks targeting the United Arab Emirates, just hours after U.S. Navy destroyers completed a passage through the strategically critical Strait of Hormuz.

The confrontation unfolded in sequence: over the weekend, former U.S. President Donald Trump announced a new naval escort mission for commercial shipping transiting the strait, a chokepoint that carries roughly 20 percent of the world’s daily oil and gas trade. On Monday morning, the UAE’s defense ministry confirmed that Iranian-origin drones and missiles had struck targets in the emirate of Fujairah, home to a major oil storage and export terminal. The attack sparked a visible fire at an onshore energy facility, authorities confirmed. Iran’s state media reported that the Iranian navy fired a cruise missile as a “warning shot” in response to the U.S. naval movement, while prior reports indicated Tehran had also targeted an Emirati oil tanker with unmanned aerial vehicles.

Tehran’s forces have effectively blocked access to the strait since early March, a retaliatory move against the joint U.S.-Israeli military campaign launched on February 28. This action comes amid a sustained U.S. economic blockade on Iranian ports, and while Trump has extended an initial two-week ceasefire indefinitely, the core conflict and its far-reaching economic disruptions remain unresolved. The latest escalation immediately rippled through energy markets: by 1530 GMT, the July Brent crude contract, the global benchmark for oil, had climbed 5.5 percent to settle at $114.14 a barrel, while the U.S. domestic benchmark West Texas Intermediate for June delivery rose 3.4 percent to hit $105.44 per barrel.

While the Middle East crisis roiled energy markets, global equity performance diverged sharply on Monday, driven by a resurgent rally in artificial intelligence stocks fueled by stronger-than-expected corporate earnings. Across Asian exchanges, the euphoria around AI pushed benchmark indices in Seoul and Taipei to all-time record closes, with Seoul’s Kospi surging more than five percent and Taipei’s weighted index jumping more than four percent. The gains were led by top semiconductor firms that power global AI infrastructure: South Korea’s SK Hynix climbed 12.5 percent, rival Samsung added more than five percent, and Taiwan’s leading contract chipmaker TSMC gained 6.6 percent.

This rally was sparked by blowout first-quarter earnings reports last week from tech giants including Apple, Google, Microsoft and Samsung. The results rekindled investor appetite for AI stocks after a period of market volatility triggered by the February U.S.-Israeli strikes on Iran. Ipek Ozkardeskaya, a senior analyst at Swissquote, noted that investors are clinging to “optimism that AI continues to mask the pain elsewhere” across geopolitical hotspots. Data from financial analytics firm FactSet shows S&P 500 companies are on track to post overall first-quarter earnings growth of 27.1 percent, the fastest pace recorded in more than four years. More tech earnings are on tap this week, with reports expected from Palantir Technologies on Monday, followed by Advanced Micro Devices and Arm Holdings later in the week.

However, the rally lost steam on U.S. exchanges after the oil price surge. The tech-heavy Nasdaq composite, which opened at a new record high following its Friday close, fell into negative territory to end the day down 3.4 percent at 25,041.69. The Dow Jones Industrial Average dropped 0.8 percent to 49,117.04, while the S&P 500 dipped 0.4 percent to 7,203.95. Major European benchmarks also closed in the red: Germany’s DAX 40 fell 1.2 percent and France’s CAC 40 dropped 1.7 percent. Markets in Tokyo, Shanghai and London were closed for public holidays.

Patrick O’Hare, an analyst at Briefing.com, pointed out that despite the downward move, many investors who missed the earlier AI rally are waiting for market pullbacks to enter positions. “That is perhaps why the indices just aren’t selling off to any large degree,” he explained. Hong Kong’s Hang Seng Index bucked the global downward trend to close 1.2 percent higher. In currency markets, the Japanese yen saw volatile trading, spiking higher against the U.S. dollar early Monday amid fresh speculation that Japanese authorities had intervened again to support the battered currency. Media reports estimate Tokyo spent as much as $31 billion on a currency intervention last Friday, which also pushed the yen sharply higher. By Monday’s close, the dollar traded at 157.15 yen, up slightly from 157.06 yen on Friday.

The Australian equity market extended its prolonged downturn into a ninth losing session in 10 trading days on Monday, driven by growing investor anxiety over an impending interest rate hike from the Reserve Bank of Australia (RBA) and a wave of downbeat corporate announcements. By the closing bell, the benchmark ASX 200 had slid 32.7 points, or 0.38%, to settle at 8697.1, while the wider All Ordinaries index dropped 30.9 points, or 0.35%, to end the session at 8923.8.

The nation’s big four banking giants recorded a mixed trading session, with results split by recent corporate earnings reports. National Australia Bank (NAB) led the declines among major lenders, dropping 1.58% or 62 cents to close at $39.20 after reporting a fall in half-year profits. Commonwealth Bank of Australia also closed in negative territory, edging 0.48% or 82 cents lower to $172.21. Gains were recorded by the remaining two major banks: ANZ rose 1.9% or 67 cents to finish at $36.29, while Westpac gained 0.13% to close five cents higher at $38.50.

Commodity markets also trended downward through the session. Spot gold prices fell 0.37% or 16.97 points to settle at US$4595.53 per ounce, while international benchmark Brent crude dropped 0.8% or 0.87 points to trade at US$107.30 per barrel. Against this backdrop, the Australian dollar hit a four-year high against the U.S. dollar, last trading at 72.02 US cents.

The majority of ASX sectors closed the day in negative territory. The Consumer Staples sector was the hardest hit, sliding 2.58% following a series of corporate updates. Alcohol and retail conglomerate Endeavour Group fell 3.8% or 12 cents to $3.29 after revealing plans to cut $100 million in operating costs by the 2027 financial year. Supermarket giant Coles Group dropped 3.93% or 90 cents to $22.02, while dairy processor Bega Cheese lost 3.58% or 20 cents to close at $5.38. The Utilities sector also posted notable losses, with AGL falling 3.1% or 30 cents to end at $9.39. The Information Technology sector was a rare bright spot, climbing 1.03% overall, led by a 6.15% jump for location technology firm Life360 (to $21.23, up $1.23) and a 2.92% rise for accounting software provider Xero (to $82.92, up $2.35).

All investor attention now turns to Tuesday’s RBA monetary policy announcement, where another interest rate increase is widely forecast. Market expectations for a hike have been amplified by global energy market volatility stemming from the ongoing conflict in the Middle East. BetaShares chief economist David Bassanese noted that while an increase would be disappointing for Australian mortgage holders, the broader sharemarket is unlikely to see extreme volatility in the days following the decision, as the move is already largely priced in. “Given it’s expected, the decision shouldn’t have a big effect on the market on Tuesday,” Bassanese explained. “The tone of the statement that accompanies the decision will be probably just as important as the decision itself. The market may be relieved if they raise rates but then signal that they’ll be pausing for some time.” He added that the RBA needs to cool domestic economic growth to prevent energy-driven inflation from becoming embedded in long-term wage and price setting. All eyes will be on RBA governor Michele Bullock as she delivers the central bank’s latest policy call and forward guidance.

A number of individual companies posted steep declines following negative corporate updates Monday. Footwear retailer Accent Group saw its share price plunge 12.9% or eight cents to 54 cents after the firm confirmed it is facing an investigation by the Australian Securities and Investments Commission (ASIC) into share market trading conducted by chief executive Daniel Agostinelli. The company also cut its full-year pre-tax earnings forecast to between $79.5 million and $84.5 million, well below consensus analyst expectations. Energy firm Viva Energy fell 3.2% or eight cents to $2.42 after announcing that repair works to its Geelong oil refinery, damaged in a major fire last month, would not be completed until the end of June, later than some market projections. Infant formula manufacturer A2 Milk recorded one of the steepest single-day drops, sliding 9.9% or 72 cents to $6.55 after issuing a recall of thousands of formula units shipped to the United States, triggered by the discovery of a toxin that can cause severe illness in young children.

Australia is steadily falling further off track from its ambitious national housing construction goals, after new official data revealed a sharp double-digit drop in building approvals during March that has deepened concerns over ongoing supply shortages and affordability crises across the country.

Data published by the Australian Bureau of Statistics (ABS) shows that just 17,300 new dwellings — including standalone homes, apartments, semi-detached properties and townhouses — received planning approval across the nation in March. This marks a 10.5% decline from February’s revised figure, which hit a more-than-four-year high of 19,339 approved projects. Over the 12-month period ending in March, national total dwelling approvals reached 198,396, a figure that remains well short of the annual benchmarks laid out in the federal government’s key housing policy.

Under the National Housing Accord, all Australian state and territorial governments have committed to delivering 1.2 million new homes over five years, which translates to an annual target of 240,000 new constructions by June 2029. Economists warn that the latest approvals data confirms the nation is not on course to hit this goal, with a cascade of economic and geopolitical headwinds piling relentless pressure on the domestic construction sector.

AMP senior economist My Bui identified multiple overlapping factors dragging on the sector: the ongoing conflict in the Middle East, which has disrupted global energy markets, combined with persistent domestic labour shortages, rising construction material costs, and elevated interest rates have all created significant barriers to ramping up new home construction. “With these ongoing headwinds hitting the construction sector, from rising material and labour costs to tighter financing conditions, it’s increasingly likely that we will keep slipping further and further away from the National Housing Accord’s annual housing targets,” Bui explained.

Lucinda Jerogin, associate economist at Commonwealth Bank, echoed these concerns, noting that the drop in approvals itself creates an additional layer of pressure for construction firms operating in the already strained market. “Headwinds are continuing to build, as higher interest rates and rising input costs weigh heavily on sector profitability and project pipeline,” Jerogin said. “We expect new dwelling cost inflation to accelerate in the coming months, following a series of recently announced price hikes for core construction materials.”

The latest housing data comes amid a broader resurgence of inflationary pressure across Australia. Last Wednesday, ABS data confirmed that the national Consumer Price Index rose 4.6% in the 12 months to March 2026, hitting the highest annual inflation rate since September 2023, when the Australian economy was still in its post-COVID-19 rebound phase. Fuel prices have been the single largest driver of this recent inflation surge: petrol prices jumped 32.8% in March alone, pushing up overall transport costs by 9.2% over the 30-day period.

This spike in global energy prices can be traced directly to escalating geopolitical tensions in the Middle East. Since the outbreak of open conflict between Israel and Iran that began at the end of February, oil markets have seen extreme volatility. Tensions have also disrupted shipping through the Strait of Hormuz, the critical global chokepoint through which roughly 20% of the world’s daily oil supplies pass, pushing up global crude prices significantly and raising transport and production costs for industries across Australia, including construction.

Breaking down the approvals data at the state level, Victoria outperformed all other Australian jurisdictions in March, recording 5,102 total dwelling approvals, including 2,853 approvals for standalone houses. New South Wales followed closely behind with 4,445 total approvals, 2,351 of which were for houses — marking the strongest monthly growth in house approvals for the state since 2024. Queensland came in third with 3,910 total approvals and 2,258 house approvals.

Western Australia recorded 2,158 total dwelling approvals (1,632 houses), while South Australia logged 1,632 total approvals and 816 house approvals for the month. The Australian Capital Territory recorded 337 approvals, Tasmania recorded 209, and the Northern Territory recorded just 46 new dwelling approvals in March.

The ongoing shortfall in new housing supply continues to worsen Australia’s long-running housing affordability crisis, pushing up rental and property purchase prices and putting home ownership out of reach for many aspiring Australian buyers, particularly young couples and first-time entrants to the property market.

Australia’s central bank is gearing up to deliver another aggressive interest rate increase this Tuesday, with a fresh surge in persistent inflation leaving policymakers with little choice but to squeeze the national economy. Financial and economic analysts widely expect the Reserve Bank of Australia (RBA) to raise the official cash rate by 25 basis points at its 2:30 pm board meeting, marking the third consecutive rate hike in 2026. If the forecast holds true, the benchmark cash rate will climb back to 4.35 percent, completely erasing the three rate cuts implemented to support the economy in 2025 and piling fresh financial stress on roughly 3.6 million Australian mortgage holders.