Australian shares pare losses after cenbank holds rates as expected

Australian shares trimmed early losses on Tuesday after the central bank left its official cash rate unchanged, as was expected, following a red-hot inflation report last week that left little room to ease policy further.

The S&P/ASX 200 index was down 0.5% at 8,847.8 points shortly after the policy decision, having been trading around 30 points lower than that prior to the rate call.

The Reserve Bank of Australia left its official cash rate at 3.6% after an uncomfortably high third-quarter inflation reading threw any chances of near-term rate cuts out the window.

“Interest rate futures suggest the RBA’s rate-cutting cycle has come to an end, pricing in no more cuts in 2025 and 2026,” Westpac analysts said in a note before the decision on Tuesday.

Mike Houlahan, a director at FX broker Electus Financial in Auckland, said, “It was a reasonably predictable dovish hold. They cited temporary factors causing that spike in inflation.”

Heavyweight miners remained the biggest laggards on the benchmark index on softening iron ore futures.

Weak copper prices due to slowing manufacturing activity in China and a stronger dollar also weighed on investor appetite for miners.

The mining sub-index was on track for a second straight day of losses, falling as much as 1.2%.

BHP Group and Rio Tinto retreated over 1% and 2.3%, respectively, while Fortescue declined about 3%.

Energy stocks were down 0.7% after a more than 3% gain in the past four sessions.

Woodside Energy and Santos fell about half a percentage point each.

Financial stocks slipped 0.3%, with top lender CBA falling 0.7%.

Shares of Novonix plunged as much as 15% to hit a one-month low after a unit of automaker Stellantis terminated its offtake agreement with the battery materials supplier.

New Zealand’s benchmark S&P/NZX 50 index was up 0.4% at 13,605.89 points in afternoon trading.