ASX narrows loss, $A falls on Bullock’s ‘restrictive’ rates remark

The local sharemarket finished lower on Tuesday after the Reserve Bank of Australia delivered its third interest rate increase this year to tame runaway inflation.

Although the S&P/ASX 200 Index closed down 16.60 points, or 0.2 per cent, at 8680.50, it did pare some earlier losses following RBA governor Michele Bullock’s statement that the cash rate had now become a “bit restrictive”, after the bank raised it to 4.35 per cent, the highest level in more than a year.

It was an 8-1 decision and reversed all the rate cuts the central bank made in 2025. The RBA also updated its forecasts and now has inflation peaking at 4.8 per cent in June before easing to 2.5 per cent by mid-2028.

The Australian dollar hit a low of US71.39¢ after Bullock’s press conference sounded less hawkish than expected.

“This gives the board space to see how the conflict plays out and the response of Australian households and businesses to the shock,” the governor said. “The board will continue to be driven by the incoming data, and we will monitor the situation overseas.”

Earlier in the session, the ASX had hit a five-week low of 8621.60 after renewed strikes in the Middle East sparked an overnight rally in Brent to around $US113 a barrel.

Banks were the main drag as Westpac fell 2.3 per cent to $37.63 after the lender’s first half report showed signs that profit margins were coming under pressure even after it increased earnings by 3 per cent for the period.

ANZ fell 0.9 per cent to $35.95 and National Australia Bank 0.6 per cent to $38.95. Commonwealth Bank closed up 0.4 per cent at $172.86

The eruption of fighting in the Middle East weighed on materials as Northern Star dropped 1.3 per cent to $20.82, James Hardie 2.6 per cent to $27.96 and BHP 0.4 per cent to $54.72.

Meanwhile, Vault Minerals advanced 3.1 per cent to $4.65 after it agreed to merge with Regis Resources to form the third-largest ASX-listed gold miner, in a $10.7 billion deal that will generate more than 700,000 ounces annually.

Under the terms of the deal, Regis will acquire Vault via a scheme of arrangement and hold a 51 per cent stake in the new company. Regis shares dropped 5.9 per cent to $6.75.

Energy stocks got a boost from the higher oil price. Woodside Energy added 1.9 per cent to $32.71, Viva Energy 1.2 per cent to $2.45 and Ampol 0.5 per cent to $35.46.

Stocks in focus

In company news, Magellan dived 6.8 per cent to $9.63 amid plans to hand over its $5.3 billion Global Equities funds to Vinva Investment Management from early June, which will cut fees and scrap performance charges entirely.

Technology company Codan fell 9.4 per cent to $39.80 after billionaire philanthropist Pamela Wall sold about 8 million shares worth just over $300 million, according to The Australian Financial Review’s Street Talk column.

Flight Centre rose 4.2 per cent to $10.59 as it reaffirmed guidance for underlying profit of between $315 million and $350 million after a solid first nine months of the year.

And Ventia Services Group jumped 5.8 per cent to $5.89 after it was awarded a $340 million contract by the Victorian government to deliver road maintenance services in the Grampians and Eastern metropolitan regions.