Australia’s benchmark share index staged a remarkable afternoon comeback on Tuesday, erasing early losses to close firmly in positive territory, driven by a carefully watched speech from Reserve Bank of Australia (RBA) Governor Michele Bullock and a fresh drop in global oil prices. By the closing bell, the ASX 200 had climbed 53.80 points, or 0.60%, to settle at 8947.80, while the broader All Ordinaries index gained 48.20 points, or 0.53%, to reach 9112.00. Alongside the market uptick, the Australian dollar weakened slightly to 69.70 U.S. cents.
Nine out of the 11 tracked industry sectors closed the session in positive territory, with consumer discretionary stocks leading the charge. Retail heavyweight Wesfarmers saw its shares rise 2.08% to $89.22, electronics retailer JB Hi-Fi gained 2.20% to hit $78.15, and travel agency Flight Centre jumped 5.07% to $12.64. The healthcare sector also posted robust gains: biotech firm CSL rose 2.69% to $119.52, medical device maker ResMed climbed 3.39% to $28.95, and pathology provider Sonic Healthcare gained 2.85% to $22.01.
The only major headwind to the market’s rally came from the mining sector, where large-cap resources stocks pulled back on the day. BHP Group fell 1.21% to $59.37, Rio Tinto dropped 2.48% to $159.53, and Fortescue Metals edged 0.53% lower to $18.70, offsetting a portion of the gains across other sectors.
The primary catalyst for the market’s turnaround was Bullock’s speech, in which she outlined that domestic demand growth is slowing faster than the central bank previously projected, alongside a weakening labour market and a greater-than-expected slowdown in the housing sector. Tony Sycamore, senior market analyst at IG, noted that the remarks calmed investor fears of aggressive near-term interest rate hikes, even as the RBA retained its official hawkish bias. The RBA board has repeatedly stated it stands ready to raise the cash rate further if required to hit its inflation mandate.
“While the RBA’s hawkish bias remains — ‘The Board is prepared to act as required to achieve its mandate, including by increasing the cash rate further if needed’ — the governor noted that demand growth is moderating broadly as expected and that the housing market has softened by more than the Bank had anticipated in May,” Sycamore explained. Combined with the latest drop in oil prices, markets are now only pricing in a 5 basis point rate hike at the RBA’s August policy meeting, with a full 25 basis point increase not fully priced in until March 2027. That said, Sycamore emphasized that Wednesday’s release of June quarter inflation data will be a critical data point for future rate expectations.
A second supporting factor for the market uptick was a further 0.9% fall in Brent Crude prices, which dropped to $US87.56 per barrel. The decline followed comments from former U.S. President Donald Trump, who revealed that peace talks between Washington and Tehran have resumed, easing geopolitical risks that have put upward pressure on energy prices in recent weeks.
In individual company news, online travel firm Web Travel was the day’s top performer, with shares surging 17.08% to $3.29 after the company announced a $90 million share buyback program and upgraded its first half EBITDA forecast to a range of $80 million to $86 million. Electronics retailer Harvey Norman also gained 2.33% to $4.83, even after a court ordered the company to pay $35 million in penalties over a deceptive advertising campaign. On the downside, defence technology firm Droneshield dropped 13.22% to $1.80 after the company reported first half revenue of $125.8 million but confirmed that profit margins had shrunk from 65% a year earlier to 60% amid ongoing industry headwinds.