A cautious tone struck by the Reserve Bank’s Michele Bullock on Tuesday afternoon pushed Australian shares lower, despite the central bank’s decision to cut interest rates for the first time in five years.

The S&P/ASX 200 slipped 0.7 per cent, or 56.10 points, to 8481, posting its second consecutive day of losses. The Australian dollar slipped to US63.51¢ after hitting a two-month high on Monday. Seven of 11 sectors closed lower, with energy stocks posting the largest loss.

The Reserve Bank as expected cut its official cash rate by 25 basis points to 4.1 per cent on Tuesday. Yet, Bullock said the decision was not a “lay down misere”, citing data that pointed to a tightening labour market that risked pushing up wages and inflation. Market participants have forecast two further rate cuts this year and a ‘shallow’ easing cycle.

Banks extended losses in late trading as a result. Commonwealth Bank dropped 1.3 per cent to $162.78, Westpac fell 3 per cent to $32.31, ANZ 1.8 per cent to $30.61 and NAB 2.5 per cent to $39.51. Consumer discretionary stocks also sold off. Index bellwether Wesfarmers fell 1.4 per cent to $78 and JB Hi-Fi dropped 3.5 per cent to $98.23.

“There was a little bit of profit taking on those interest-rate sensitive sectors, and a little bit of caution around the potential for a shallow rate cutting cycle,” said chief CommSec economist Ryan Felsman.

Among the companies to report earnings on Tuesday, Challenger posted the largest loss, dropping 9 per cent to $5.58, after cash operating margins in its life division fell short of expectations.

In commodities, Brent crude climbed to $US75.41 a barrel after OPEC said it was considering pushing back a series of monthly supply increases due to begin in April.

That didn’t stop a trading update from Woodside weighing on the energy sector, however, after the oil and gas giant said costs in 2024 had come in higher than expected. The stock closed 1.5 per cent lower to $23.49.

Stocks on the move

In other corporate news, BHP edged up 0.4 per cent to $40.97, reversing an early loss. The company announced its lowest interim dividend in eight years on Tuesday, at US50¢, as weaker demand for steel weighed on profit.

Seek rose 1.8 per cent to $24.67 after lifting its interim dividend 26 per cent from a year ago to 24¢ fully franked.

Bapcor dropped 7.7 per cent after the company announced the resignation of chief financial officer George Saoud. The company is due to report half-year earnings next week.

HMC Capital leapt 9.9 per cent to $10.88 after assets under management rose 45 per cent to $18.5 billion in the six months to December, with a significant profit contribution from its private equity division.

Judo rallied 8.5 per cent to $2.10 after the company lifted its margin guidance to the “upper end” of a previously stated range of 2.9 per cent to 3 per cent.

And Iluka-backed Deterra Royalties dropped 2.6 per cent to $4.14 after first-half net profit slumped to just under $64 million, owing to lower iron ore prices.