Source : THE AGE NEWS
The Australian sharemarket finished higher after the Reserve Bank kept interest rates unchanged, with energy stocks rallying due to the latest jump in oil prices amid the US-Iranian stalemate over the Strait of Hormuz.
The S&P/ASX 200 rose 18 points, or 0.2 per cent, to close at 9250.60 on Tuesday, with energy stocks leading the gains, while six of its 11 industry sectors were in the red. The local bourse slid 0.3 per cent on Monday. The Australian dollar dropped slightly to US70.53¢.
The Reserve Bank kept the official cash rate at 4.35 per cent – broadly in line with economists’ expectations – as it weighs a slowing economy, dragged down by a weaker-than-expected housing market, against risks that inflation could be pushed up by an “AI boom” and the continued conflict in the Middle East.
The ASX briefly spiked after the rate decision, as higher interest rates would have raised borrowing costs for consumers and companies, weighing on company profits and sharemarkets. But it gave up some of those gains as the central bank warned that “while the economy appears to be slowing as expected […] inflation is still too high.” Financial markets now believe there is a 50-50 chance of a further rate rise late in the year, with rate relief not expected before the second half of 2027.
“The RBA finds itself between a rock and a hard place,” said KPMG Australia chief economist Brendan Rynne. “It is trying to bring inflation back to target without causing unnecessary damage to the labour market, but ultimately, its primary responsibility is price stability. On balance, we would not be surprised to see another rate increase in the coming months.”
Meanwhile, reporting season is starting to heat up, with Southern Cross Media Group and Life360 both having reported results before the start of trading.
Southern Cross Media, the business created from the merger of Kerry Stokes’ Seven West and radio group Southern Cross, finished down 0.9 per cent after it announced a $13 million loss for the 2025 financial year due to deteriorating market conditions. The group, which owns the Seven Network, The West Australian newspaper and the Triple M network, said revenue dropped across television, newspapers and radio. Kerry Stokes’ SGH, which owns 20.1 per cent of Southern Cross, slumped 10.3 per cent after saying its net profit stalled at $920 million.
Family tracking app maker Life360 weighed the tech sector down as it plummeted 19.4 per cent. While its revenues in the June quarter jumped 38 per cent to $US159 million ($225.4 million), its operating expenses grew by 43 per cent, helping push quarterly net profit down to $US5.1 million, from $US7 million a year ago.
On the energy front, oil and gas giants Woodside and Santos jumped 3.8 per cent and 5.4 per cent, respectively, as oil prices held a four-day gain amid dimming hopes for a breakthrough in the standoff between the United States and Iran over the Strait of Hormuz, the narrow waterway between Iran and Oman that normally carries as much as one-fifth of the world’s oil supply.
Brent traded near $US88 a barrel after advancing 5 per cent in the previous session, while West Texas Intermediate was above $US82.
Iran has issued a long list of demands that it said would have to be met by the US before ships could move freely again through the strait, including reparations payments for the war. US President Donald Trump in turn demanded compensation from Iran for all the people they have killed in conflicts after Tehran.
Trump said in a social media post that he will put the new demands “firmly into any, and all, future negotiations.” The hardening stance makes it unlikely that Tehran and Washington will be able to agree to any immediate pact to end the war and ease the strain on global energy supplies.
The ongoing uncertainty also benefited local refiners Ampol and Viva Energy, which gained 3.4 per cent and 2.3 per cent, respectively, while coal producers Yancoal and Whitehaven rose 2.8 per cent and 2.5 per cent amid bets the oil crunch will bolster demand for their fossil fuel.
Mining stocks were also moderately higher, with BHP up 0.7 per cent, Rio Tinto up 0.5 per cent and Fortescue up 0.2 per cent. Gold miners were mixed, with Northern Star slipping 0.9 per cent while Evolution Mining added 0.7 per cent and Newmont gained 2.8 per cent as bullion prices advanced to a two-month high above $US4400 an ounce ahead of a key US inflation report that could provide fresh clues to the Federal Reserve’s appetite for an interest-rate hike.
On the flipside, shares of companies with high fuel dependency such as airlines declined. Qantas fell 3.2 per cent, and Virgin Australia lost 2.5 per cent.
Financial stocks, which account for about a third of the entire ASX, were also lower. CBA, Australia’s biggest lender, was down 0.2 per cent and ANZ fell 1.3 per cent, while Westpac finished flat and National Australia Bank edged up 0.2 per cent.
On Wall Street overnight, the US stock market edged down from its all-time high on Monday amid the ongoing uncertainty over the Strait of Hormuz.
The S&P 500 slipped 0.1 per cent from its record set on Friday. The Dow Jones Industrial Average dipped 0.1 per cent and the Nasdaq composite fell 0.3 per cent.
Momentum slowed for Wall Street stocks following a rally powered by soaring profits for big US companies. Reports are on track to show earnings per share leaped 50 per cent in the spring from a year earlier for companies in the S&P 500, according to FactSet. That would be the best growth since five years ago, when the economy was roaring out of the chasm created by COVID.
Berkshire Hathaway was one of the latest companies to deliver a stronger profit for the last quarter than analysts expected, and the company built by legendary investor Warren Buffett said over the weekend that it’s also invested some of its massive pile of cash into stocks under its new CEO, Greg Abel.
Berkshire Hathaway has been famous for buying stocks at what it considers low prices, and criticism has been high that US stocks generally look too expensive. But when they report strong profits, it helps them look less pricey. Berkshire Hathaway’s stock rose 1.5 per cent.
MarineMax jumped 46.1 per cent after the retailer, marina operator and superyacht services provider said it agreed to sell itself for about $US1.5 billion in cash to a portfolio company of Blackstone.
But Intel helped offset such gains and fell 4.1 per cent after saying it may sell $US15 billion of its stock. Such a move would dilute the ownership stakes of shareholders, and Intel said it would likely use the cash for investments to take advantage of the huge spending underway on artificial-intelligence technology.
Higher oil prices push inflation upward, and the main event for Wall Street this week will likely be Wednesday’s update on how bad inflation was last month. Economists expect it to show inflation slowed to 3.4 per cent from 3.5 per cent in June. A slowdown would mean less pressure on the Federal Reserve to raise interest rates.
A report on Friday showing unexpectedly weak hiring across the US lowered Wall Street’s expectations for an upcoming rate hike. But traders still see a nearly 52 per cent chance the Fed will raise its main interest rate at its next meeting in September, according to CME Group.
