RBA interest rate pause lifts ASX as miners and tech stocks rise

IGO (up 3.2 per cent) and Liontown (up 2.2 per cent) climbed along with Lynas Rare Earths (up 3 per cent), which extended its rally from Monday after signing an updated contract with the US Department of Defence, under which the US government would contribute US$258 million ($384 million). The contract is for the construction of the heavy rare-earths component of the department’s rare-earths processing facility in Texas.

Gold miners also advanced as Newcrest (up 1.4 per cent), Evolution Mining (up 2.4 per cent) and Northern Star (up 1.6 per cent) all stepped up amid a 0.6 per cent increase in the spot gold price overnight. Heavyweights BHP (up 0.8 per cent) and Fortescue (up 1.4 per cent) were also stronger following a 0.7 per cent lift in iron ore prices.

Shares in the country’s biggest bank CBA (up 0.1 per cent) dropped in early trade after it said next week’s full-year results would include a $212 million provision for costs relating to changes in its Bankwest business, and a one-off levy for a government compensation scheme. All four big banks traded in the green after the Reserve Bank’s decision.

TPG shares jumped almost 12 per cent to close at $5.60 after the telco said Macquarie-owned rival Vocus had lobbed an “indicative, highly conditional, non-binding offer to acquire certain of TPG’s enterprise, government and wholesale assets and associated fixed infrastructure assets, including Vision Network, for approximately $6.3 billion”. TPG shares are up over 16 per cent for the year.

Shares in infant goods retailer Baby Bunting surged by more than 23 per cent at the open after a trading update that revealed a significant profit drop was received positively by investors. The company said it expected pro-forma net profit after tax of $14.5 million for the year, which is a decline of 51 per cent, but that number is better than analyst expectations and at the top end of the company’s guidance.

Wilsons analysts upped their target price for the stock by 50¢ to $2.10. Shares were 20 per cent stronger to $2.0 at the close.

The laggards

Industrials (up 0.05 per cent) was the weakest sector on the local bourse with Reece (down 1.5 per cent), Qantas (down 0.6 per cent) and Atlas Arteria (down 1.1 per cent) among the biggest large-cap decliners.

Utilities were also weaker as infrastructure investment company Infratil dropped 2.6 per cent and APA Group shed 0.2 per cent.

The lowdown

BetaShares chief economist David Bassanesse said the Australian sharemarket jumped on the RBA’s decision and that interest-rate sensitive sectors responded especially favourably.

“The market itself wasn’t predicting an interest rate rise and economists were evenly split on the decision, but there was enough uncertainty leading into the decision for the market to celebrate the pause,” he said.

“It was a day for cyclical over defensive sectors because the risks of a recession driven by the RBA are receding, meaning consumer related companies and growth stocks did better.”

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“Copper is critical for the global energy transition, which is at the heart of Rio Tinto’s strategy, and Chile is one of the most important sources of world supply as demand for copper in renewables and electrification grows,” Rio Tinto chief executive Jakob Stausholm said as the company teamed up with the world’s largest copper producer to explore a major new tenement in Chile’s remote Atacama region.

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