The Australian sharemarket moved higher on Wednesday as gains in heavyweight mining and banking stocks offset growing expectations that the Reserve Bank of Australia could raise interest rates at its upcoming policy meeting.
The S&P/ASX 200 Index closed 50.9 points or 0.6% higher at 8,743.5, with just four of the 11 sectors advancing during the session.
The move followed hawkish comments from Reserve Bank of Australia deputy governor Andrew Hauser on Tuesday that prompted traders to increase bets on a potential rate hike on 17 March.
Both Westpac and UBS now expect the central bank to lift the cash rate next week after Hauser indicated the economy “has limited spare capacity” and suggested policymakers may need to “act decisively” to contain inflation.
However, ANZ economists Aaron Luk and Adelaide Timbrell are expecting the next interest rate increase to occur in May 2026, having earlier anticipated the central bank would hold rates steady for a longer period at the start of the year.
The Materials sector led the gains, with BHP up 1.4%, Rio Tinto adding 1.1% and Fortescue lifting 3.7%.
Rare earth producer Lynas Rare Earths surged 16.2% after extending its long-term supply agreement with Japan Australia Rare Earths to 2038.
Gold producers also moved higher as bullion prices climbed above US$5,200 per ounce.
Northern Star Resources added 3%, and Newmont Corporation recorded gains of 1.6%. Ora Banda Mining also jumped 21.5% after announcing a major upgrade to the gold resource base at its Round Dam deposit.
Australia’s major banks benefited from the prospect of higher interest rates, which could improve net interest margins.
Commonwealth Bank gained 0.5%, National Australia Bank lifted 1.1%, Westpac added 0.5%, and ANZ rose 1.8%.
Energy stocks also edged higher as oil prices remained volatile. Crude traded around US$88 per barrel after reports suggested the International Energy Agency may consider the largest release of emergency oil reserves in its history to stabilise markets.
Woodside Energy added 0.8%, while Santos ticked up 0.1%.
In company news, DroneShield rose 1.5% after announcing plans to establish counter-drone manufacturing operations in the European Union, expanding the company’s industrial footprint and production capacity in the region.
On the bond markets, the yield on Australia’s 10-year government bond slipped 0.5% to 4.848%, while the two-year yield rose 0.2% to 4.425%.
