New Zealand shares slip after RBNZ's first hike in 3 years, Australian stocks fall

New Zealand shares slipped on Wednesday after the central bank raised interest rates for the first time in three years, as widely expected, while Australian stocks tumbled as mining and banking shares came under heavy selling pressure.

New Zealand’s benchmark S&P/NZX 50 index dropped 0.6% to 13,678.92 by 0248 GMT.

The Reserve Bank of New Zealand (RBNZ) raised its benchmark rate by 25 basis points to 2.50% to tackle sticky inflation underpinned by rising domestic prices even as global energy prices have retreated, following the partial resumption of the Strait of Hormuz.

The central bank said that although energy prices have decreased, the effects of the shock will linger for some time, and the outlook for medium-term inflation pressures remains uncertain.

The hike puts the RBNZ on par with other major central banks, turning to a hawkish stance to counter near-term oil shocks triggered by the onset of the war. Australia’s central bank has already hiked rates three times this year.

In Australia, the S&P/ASX 200 index dropped more than 1% to 8,714.40.

The revival of tensions between Washington and Tehran kept investors on edge after the US launched fresh strikes against Iran in response to attacks on vessels in the Strait of Hormuz, pushing oil prices higher.

Miners fell 2.8% to three-month lows, after iron ore prices declined overnight.

Mining giants BHP and Rio Tinto fell 3% and 2.4%, respectively.

Gold stocks shed as much as 4% and were set for a third consecutive day of declines, as bullion prices weakened.

Financials fell 0.5%, with the “Big Four” banks trading in the red.

Cushioning losses, energy stocks advanced 2.6%, set for their strongest session in over two months, tracking firmer oil prices. Oil majors Woodside and Santos gained 2.6% and 4.7%, respectively.