• The ASX rose another 1% on Tuesday
  • The RBA hiked its cash rate by 25bp, in line with expectations
  • Gold Trip won the Melbourne Cup, not in line with expectations

 

Aussie shares rose for the second day straight, up by 1.3% on Tuesday after the RBA lifted rates by 25bp – in line with expectations.

Investors breathed a sigh of relief as a 50bp hike had been on the cards earlier. The softer stance has now paved the way for possible lower rate hikes in the coming months.

RBA governor Phil Lowe however sounded a dire warning, saying that inflation could peak at 8%. Currently, the headline CPI is at 7.3%.

“As is the case in most countries, inflation in Australia is too high. The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that,” said Lowe.

Frank Uhlenbruch, Investment Strategist in the Janus Henderson Australian Fixed Interest team, said:

“…. We expect the RBA to keep policy tight until the first half of 2024.

“Given the uncertainties and the long and variable monetary policy lags, we still think it prudent for the RBA to pause after tightening in February and see how the economy responds to the fastest and largest tightening in the inflation targeting era.”

Earlier today, Gold Trip, a 5 year old stallion from France, won the $8m Melbourne Cup. The horse had a $19 odds before the race, with Deauville Legend favourites at $3.50.

Meanwhile, Australian home prices fell for the sixth month in a row as higher rates make mortgages more expensive.

Property data firm CoreLogic showed home values across the country fell a further 1.2% in October from a month earlier, with the median home price at $721k.

Brisbane saw the biggest fall at 2%.

CoreLogic’s Research Director, Tim Lawless said it is probably still too early to claim the worst of the decline phase is over.

“Despite the easing in the pace of decline, with Australian borrowers facing the double whammy of further interest rate hikes along with persistently high and rising inflation, there is a genuine risk we could see the rate of decline re-accelerate as interest rates rise further and household balance sheets become more thinly stretched,” he said.

The ASX Real Estate sector led the bourse and rose 2% today on the news, while other sectors also finished in the green.

Best performing large cap stocks today include: Fortescue (ASX:FMG) which was up 4% and Imugene (ASX:IMU) which rose by 10%.

Looking ahead to tonight’s session on Wall Street, the FOMC will convene for the first of its two-day meeting.

Data to be released overnight include the US ISM manufacturing index, the US JOLTS job openings , and the US construction spending for September.

 

BIG CAP WINNERS

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Lithium producer Pilbara Minerals (ASX:PLS) rose 3% after releasing a corporate presentation to investors.

Other green metal stocks Allkem (ASX:AKE) and Lynas (ASX:LYC) also rose 3%.

Graincorp (ASX:GNC) added another 6% to yesterday’s 7% gain on the back of rising wheat prices caused by the conflict in the Ukraine.

 

BIG CAP LOSERS

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Coal stocks Yancoal (ASX:YAN) and Stanmore Resources (ASX:SMR) were some of the worst performing stocks amid a fall in energy prices overnight.

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