Australian shares closed modestly lower on Tuesday, paring early losses of 0.7% as investors digested the Reserve Bank of Australia’s latest interest rate increase.
The S&P/ASX 200 fell 16.6 points, or 0.2%, to 8,680.5, after earlier dropping as much as 0.7% in the session. Despite the decline, seven of the index’s 11 sectors finished higher, indicating a mixed market response to the central bank’s decision.
The Reserve Bank of Australia (RBA) lifted the cash rate by 25 basis points to 4.35% in an 8-1 vote, effectively reversing the rate cuts implemented in 2025 as policymakers respond to persistent inflation pressures.
The Financial sector closed lower overall following the rate decision. Major banks were mixed, as National Australia Bank lost 0.6%, ANZ ended 0.9% lower, while Commonwealth Bank bucked the trend to close 0.4% higher.
Westpac also dropped 2.3% after reporting a half-year profit of $3.5 billion, up just 0.1% from a year earlier.
The Materials sector led declines on the index, after gold prices fell to monthly lows overnight. Northern Star fell 1.3%, Evolution Mining dipped 1%, while Newmont gained 0.9%.
Vault Minerals also rose 3.1% to after agreeing to merge with Regis Resources in a $10.7 billion deal that will create the third-largest gold miner listed on the ASX.
Among major diversified miners, performance was mixed. BHP and Rio Tinto fell 0.4% and 0.1%, respectively, while Fortescue recorded gains of 0.5%.
Energy stocks were among the strongest performers, supported by elevated oil prices following renewed tensions in the Middle East after an Iranian strike on a United Arab Emirates (UAE) energy facility.
Woodside Energy added 1.9%, Beach Energy lifted 1.3%, Viva Energy gained 1.2%, Ampol advanced 0.5%, while Santos finished flat.
In corporate news, Magellan Financial Group fell 6.9% after announcing plans to transfer management of its $5.3 billion Global Equities funds to Vinva Investment Management from early June, alongside fee reductions and the removal of performance charges.
On the bond markets, Australian government bond yields declined, with the 10-year yield falling 0.9% to 4.976% and the 2-year yield dropping 1.4% to 4.672%.
