Share market edges higher ahead of Reserve Bank’s March interest rate call

Ahead of the Reserve Bank’s second meeting for the year, the share market edged higher on Monday even as property stocks lost ground.

Australian shares edged higher on Monday as the benchmark was dragged lower by a sharp sell-off in real estate stocks, ahead of a run of key central bank decisions.

At the closing bell, the S&P/ASX200 added just 0.1 per cent, or 5.5 points, to sit at 7675.8, while the broader All Ordinaries was unchanged at 7925.2.

The Australian dollar finished higher, adding 0.1 per cent to US65.65c.

Alongside the US Federal Reserve, the Bank of England and the Bank of Japan, the Reserve Bank will meet this week, where it is largely expected to keep interest rates on hold at 4.35 per cent.

Kyle Rodda, senior financial market analyst at Capital.com, said a recent spate of weaker-than-expected economic data had raised the possibility of a dovish pivot from the RBA at Tuesday’s meeting.

“While (inflation is) still above the RBA’s two-to-three per cent target band, the trend is clearly to the downside and may indicate a shift in the balance of risks for interest rate policy and Australian economic fundamentals,” Mr Rodda said.

Shares edged higher on Monday, buoyed by a rally in materials and financial stocks. Picture: NCA NewsWire/ Gaye Gerard

However, despite recent data flows, bond traders have tempered their expectations for an easing in interest rates, with money markets now fully priced for a cut by November, bringing the cash rate to 4.1 per cent.

Previously, they were fully priced for a 25 basis point cut in September.

Interest rate sensitive property stocks were the biggest laggard on the benchmark, shedding 1.9 per cent.

Sector heavyweights Goodman Group sank 3.6 per cent to $29.74, Charter Hall lost 1.9 per cent to $13.20, and Scentre slipped 1.8 per cent to $3.28.

The resources sector added 0.3 per cent after iron ore prices on the SGX rose 1.3 per cent to $US101.20 for the April contract, after the key steelmaking ingredient hit a eight-month low over the weekend.

Heavyweight miners were mixed with Rio Tinto adding 0.5 per cent to $117.48, while Fortescue slipped 1.1 per cent to $23.69. BHP was unchanged at $42.41.

Financials were the top performers, rising 0.6 per cent.

The big four banks all finished higher, led by Commonwealth Bank up 0.8 per cent to $116.46.

ANZ added 0.6 per cent to $28.86, Westpac rose 0.5 per cent to $26.33, and NAB rallied 0.7 per cent to $34.03.

In corporate news, South32 suspended operations at its manganese mine located on the island of Groote Eylandt, 630km east of Darwin, after the site was struck by Cyclone Megan. Shares added 4.7 per cent to $3.14.

After losing a white-label deal to rival Superloop, Aussie Broadband was instructed to cut its 20 per cent stake in the internet provider in order to comply with Singaporean regulations.

Shares in Superloop shed 6.4 per cent to $1.18, while Aussie Broadband added 0.6 per cent to $3.57.

Mixed miner Mineral Resources rallied 0.4 per cent to $66.17 after it announced plans to acquire the Lake Johnston nickel processing facility, located in Western Australia.

MinRes will repurpose the plant for lithium processing.