Australian shares end flat as RBA holds rates; clarity on war curbs risk appetite

Australian shares erased early losses to finish marginally higher on Tuesday after the central bank stood pat on rates, while investors awaited more details on a preliminary US-Iran peace deal.

The benchmark S&P/ASX 200 index ended 3.7 points higher at 8,917.70 points.

The Reserve Bank of Australia kept its cash rate steady at 4.35%, after three successive rate hikes earlier this year, but warned that it could hike rates again if needed.

Wrapping up its June policy meeting, the RBA said inflation was still too high and it would do whatever necessary to bring it down “including increasing the cash rate target further if required.”

“Board was at pains to emphasise its ongoing concerns with inflationary pressures with the oil crunch associated with the Iranian conflict still feeding through into the broader economy,” said Cameron Curko, CIO at Pitcher Partners.

Miners ended largely flat in volatile trading - BHP Group was unchanged and Rio Tinto inched 0.3% lower.

Banks ended 0.6% higher.

Globally, risk sentiment was subdued as investors awaited further signs of progress on the US-Iran war with both the countries saying permanent truce is yet to be negotiated.

“The market is taking a breather today… Traders are now awaiting specific details of the agreement particularly around the reopening of the Strait of Hormuz adopting a more cautious stance rather than chasing further upside,” said Tim Waterer, chief market analyst at KCM Trade.

Gold stocks jumped 1.8%, hitting its highest close in a month, on the back of higher bullion prices.

Energy stocks jumped 1% and tech stocks slipped 1% while health stocks traded flat.

Across the Tasman Sea, the New Zealand benchmark S&P/NZX 50 index closed 0.5% lower at 13,426.13 points.