Miners and banks propel Australian shares higher; cenbank decision on tap

Australian shares rose modestly on Tuesday, on pace to snap four straight days of losses, in index-wide gains with heavyweight banking and mining stocks at the helm, ahead of the central bank’s cash rate decision due later in the day.

The S&P/ASX 200 index advanced 1.1% to touch 8,875.80 by 2323 GMT, on track for its strongest trading session since December 23.

The benchmark fell 1% on Monday. Investors would be turning their attention to the Reserve Bank of Australia’s monetary policy meeting, with the rate decision expected at 0330 GMT.

The central bank is widely expected to raise its benchmark interest rate by 25 basis points.

Most economists in a Reuters poll reversed their earlier view that the RBA would remain on hold following hotter-than-expected domestic underlying inflation in the December quarter, the last in a batch of recent hot economic data, including a surprise decline in unemployment.

In December, over 85% of economists expected rates to stay at 3.60% in this quarter.

That view is now held by only about a quarter of those surveyed.

Financial stocks surged 1.2%, with top lender Commonwealth Bank of Australia advancing to its highest since January 19.

Rate-sensitive real estate and consumer discretionary stocks also gained 1.1% each.

Data centre overlord Goodman Group surged 1.4%, while electronics retailer JB Hi-Fi was on course for its strongest trading session since January 22. Miners rose 1.8% on the day, after tumbling nearly 7% over the last two sessions.

Sector giants BHP and Rio Tinto gained 1.1% and 2.3%, respectively.

Technology stocks gained in tandem with their peers on Wall Street, with index leaders WiseTech Global and Xero rising 0.2% and 0.5%, respectively.

In New Zealand, the benchmark S&P/NZX 50 index rose 0.5% to hit 13,485.20.