• The ASX pares losses after the RBA announcement
  • The RBA hikes by another 50bp, taking the cash rate to 1.85%
  • 8 out of 11 sectors rose

 

The ASX 200 rebounded on Tuesday following the handing down of a 50bp rate hike by the RBA this afternoon. At the close, the index pared its early losses and closed flat.

The RBA has expectedly increased its cash rate by 50bp to 1.85%.

More importantly, the central bank has warned of a higher inflation and lower economic growth in the year ahead.

It also signalled that it wasn’t done with the rate hikes.

“The Board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path,” said the RBA boss Philip Lowe.

“The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”

Lowe also said the RBA’s GDP forecast is 3.25% over the rest of 2022, down from the 4.2% prediction in May, while in 2023 and 2024 it will slow down to 1.75%.

“The RBA has well and truly joined the central bank front-end loaded tightening club,” said Frank Uhlenbruch of Janus Henderson.

“Markets are still grappling with the speed and quantum of tightening needed this cycle.”

On the ASX today, 8 of 11 sectors rose. Gains in Discretionary and Stapes were offset by losses in Energy and Miners.

Australia’s benchmark 10-year govies yield fell 10bps to 2.95% after the RBA announcement.

New figures released today also showed that mortgage lending has fallen by 4.4% during the month of June, the fastest since May 2020. Building approvals meanwhile fell by just 0.7% versus forecast of 5%, according to the ABS.

 

BIG CAP WINNERS

Swipe or scroll to reveal the full table. Click headings to sort.

A2 Milk (ASX:A2M) was up 7% before putting itself into a trading halt.

The company issued an ASX release in response to an article by the AFR which claimed it was nearing an approval from the FDA to allow A2M to import infant milk formula products into the US.

A2M said that while it has been informed by the FDA that its application is under active review, at this stage there is no certainty as to the outcome of the application or the timing of any approval.

Ventia Services (ASX:VNT) was up 5% after being awarded a road maintenance contract by Auckland Transport (AT) for the Auckland West region.

Ventia will provide reactive, routine and programmed maintenance and renewal activities across the network. The five-year contract has a value of NZ$220m over the initial term and a five-year extension option.

 

BIG CAP LOSERS

Swipe or scroll to reveal the full table. Click headings to sort.

Credit Corp (ASX:CCP) was down 7% after reporting 9% rise in NPAT for FY22, and providing a $90-97 million NPAT guidance for FY23. But the company said that US purchased debt ledgers were 80% higher than the pcp.