Rate rise fears send Australian sharemarket falling after central bank comments
The Australian sharemarket has plunged after the central bank chief delivered a shock warning to investors – leaving every sector in the red.
Australia’s sharemarket dragged on Tuesday after comments from the RBA’s top boss that interest rate cuts were “not needed” led to every sector trading in the red.
The ASX 200 fell 38.50 points, or 0.45 per cent, to 8,585.90, while the broader All Ordinaries lost 39.20 points or 0.44 per cent to 8,875.80.
The Australian dollar strengthened to buy 66.45 US cents.
All 11 sectors traded in the red led by the information technology, energy and telecommunication sectors.
TechnologyOne shares fell 1.56 per cent to $28.40, NextDC slumped 2.61 per cent to $13.78 and Life360 dropped 3.89 per cent to $36.36.
Shares in Australia’s largest telco Telstra slipped 0.61 per cent to $4.92, while TPG gave up 1.60 per cent to $3.69 and Aussie Broadband is down 0.59 per cent to $5.06.
It was a mixed day for the big four banks.
Commonwealth Bank slipped 0.57 per cent to $154.53 and Westpac stumbled 0.55 to $38.03 while NAB added 1.01 per cent to $41.01 and ANZ closed marginally higher up 0.26 per cent to $35.16
Australia’s sharemarket traded lower in the afternoon session after RBA governor Michele Bullock confirmed interest rates are more likely to rise next year.
RBA governor Michele Bullock was asked if the bank considered either cutting or hiking interest rates in December.
“We didn’t consider the case for a rate cut at all and we didn’t explicitly consider the case for a rate rise at this meeting,” she said.
“But we did consider and discuss quite a lot of the circumstances and what might need to happen if we were to decide interest rates had to rise again next year.”
eToro market analyst Farhan Badami said the RBA was clear that inflation was rising and it was not an issue the board was willing to dismiss.
“The RBA was explicit in determining that some of the rise in underlying inflation may be temporary, but there are signs of a “more broadly based pick-up” that could be persistent. That line alone tells you why it wasn’t entertaining any talk of cuts, he said.
Mr Badami says the inflation fight isn’t over.
“The RBA needs more time to judge the persistence of price pressures,” he said.
“Today’s unanimous decision underscores the bank’s belief that caution is essential when navigating complex economic conditions.”
Bapcor shares were smashed on Tuesday down 21.28 per cent to $1.85 with the motor vehicle supplier revising down first-half earnings guidance, citing a challenging October and November.
Shares in Emeco Holdings also were down 2.66 per cent to $1.28 following the mining equipment rental company announcing a positive outlook, although there was no update in guidance for financial year 2026.
Shares in global ship building company and defence prime contractor Austal were the top performer up 3.74 per cent to $6.65, while Bapcor was the biggest laggard.
