ASX 200 shrugs off RBA rate hike, gains for 2nd day

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ASX 200 shrugs off RBA rate hike, gains for 2nd day

 ASX 200 shrugs off RBA rate hike, gains for 2nd day
Image source: © Timonschneider | Megapixl.com

Highlights:

  • ASX 200 closed 0.25% higher, key influencer of the day remains RBA’s cash rate hike.
  • Energy and IT stocks pushed the index higher while losses in A-REITs and industrials offset some of those gains.

Australian shares shrugged off Reserve Bank of India's (RBA) 50 basis points rate hike and closed higher for the second day on Tuesday (5 July) as energy and IT stocks witnessed buying. The Australian equity benchmark ASX 200 ended 0.25% higher after RBA hiked its cash rate by 50 basis points (bps), which was in-line with the broad market estimates. 

RBA’s stance to tame inflation

Reserve Bank of Australia has lifted its official interest rate third time in a row today (5 July). RBA increased its cash rate by 0.5 bps to 1.35%, to bring down inflation, which is rising at a rapid pace. The rate hike means a definite hike in borrowing rates and mortgage and loan payments if fully passed on to consumers. It will in a way squeeze household budgets even more at a time when a rise in consumer prices is already weighing on it. 

Market movers

  • Westgold (ASX:WGX) amid the ASX-listed gold miners made news by achieving its full year production guidance. It reportedly made it to the guidance level because of a record-breaking quarter four. However, the company does expect a variance of 5% up or down in its full year costs, not made public yet. Another gold producer Regis Resources (ASX:RRL) also announced a record gold production achieved in its June quarter.
  • Infant formula company Bubs (ASX:BUB) launched an AU$63 million equity raising to fund growth. The offer price was 52 cents per share being at an 18.8% discount on its last traded price. The capital raise included an institutional placement for AU$32.4 million and an AU$30.6 million entitlement offer.
  • By market close, the big four banks ended the day on a bleak note. Westpac closed trade flat while Commonwealth Bank (ASX:CBA) slipped 0.2%. Meanwhile, NAB fell 0.3% and ANZ about 0.4%.

Other market trends & indices:

Australian market volatility index, A-VIX, was 0.86% lower at market close while the All-Ordinaries index gained 0.312%. Aussie Large caps, represented by ASX 50 index (XFL), closed 0.266% up.

Best and worst performers:

Image Source © 2022 Kalkine Media ®, data source- ASX website

In global markets;

In Asia, stocks were brighter today after US announced a rollback of some tariffs on Chinese consumer goods. However, China’s Shanghai Composite and Shenzhen Component were down while, Hong Kong’s Hang Seng closed higher. The Japanese Nikkei gained during the day alongside South Korean KOSPI.

In Europe, stocks are expected to open higher while investors remain focused on guidance from central banks. Other economic datasets expected today feature - the French industrial production numbers, data on Spanish consumer confidence and the final PMI data of Eurozone.

On commodities front;

  • Oil prices have shot up on tight supply. A workers strike in Norwegian offshore is threatening to disrupt the nation’s oil and gas output. Both the crude oil benchmarks-- Brent and WTI-- spiked as suppy tightening appeared to overpower recessionary concerns.
  • As per media reports, Natural gas has jumped more than 700% in Europe since the beginning of last year. It appears to have slowly matched up with oil, not just as a fuel alternative, but even in terms of driving global economies.
  • Gold lost some shine while US Treasury yields and dollar strengthened. In other precious metals, silver and palladium gained while platinum fell low.

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