ASX Large Caps: Shares dip as RBA says it ain’t done yet even after 9 rate hikes

• The ASX finished Tuesday 0.5% lower
• The RBA increased rates by 25bp for the 9th straight time, as expected
• Coal stocks rallied across the board

The ASX 200 was hovering sideways before plummeting 0.5% when the RBA announced its rates decision at 2.30pm.

Australia’s central bank has, as expected, raised the cash rate by 25bp to 3.35%.

In its accompanying policy meeting statement, the RBA said:

“The Board’s priority is to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy.

“And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later.

“The Board is seeking to return inflation to the 2–3 per cent range while keeping the economy on an even keel, but the path to achieving a soft landing remains a narrow one.”

But it was this sentence that did damage to the market.

“The Board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.”

According to CoreLogic, today’s rate hike will eat into the average Australian pockets in the following way:

Today's rate hike adds approx:
$77/month in repayments to a $500k variable rate owner-occ mortgage & $116/month to a $750k mortgage

Repayments for the same amounts are up approx $821/month and $1,232/month respectively since April '22.https://t.co/Tfe4gahJaD#rates #rba

— CoreLogic Australia (@corelogicau) February 7, 2023

The Aussie dollar jumped at the announcement, trading now at US69.40c vs US68.80c when the markets opened this morning.

Bond yields also rose (bond prices lower), with the 3-year yield rising 9 bp, and 10-year yield 7 bp higher.

On the ASX, rate sensitive stocks like Real Estate, Consumer Disrectionary, and Tech were sold off.

Energy meanwhile was the only sector in the green today, with the coal miners miners having a field day.

Coal stocks like Yancoal (ASX:YAL), New Hope (ASX:NHC) and Whitehaven (ASX:WHC) were all up around 3%

This despite coal prices (ICE-GC Newcastle) extending its string of falls, settling at $235/t overnight. Coal prices have plummeted since last Friday, and some analysts believe a rebound will likely happen only in Q3.

Meanwhile, Australia’s trade balance shrank more than expected in December according to data released today.

The trade balance fell to a surplus of $12.24 billion from $13.20 billion in November, as exports shrank 1%.

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Medibank Private (ASX:MPL) rose 2% today after announcing that it will increase its premiums by an average of 2.96% from April.

Pushpay (ASX:PPH) was up 1% as the company said it expected positive revenue growth of between 5-6% for FY23.

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ARB Corporation (ASX:ARB) plunged another 11% following its market update yesterday.

ARB said profit before tax for the half would fall within the range of $64.0 million to $64.6 million, a decline of 29.7% vs the pcp.

The company said the profit decline reflects the lower sales and the inflationary impact on the company’s cost base.