ASX up 0.4 pct ahead of RBA rates decision

The Australian share market has trended higher before what’s expected to be another hike in interest rates by the Reserve Bank.

The S&P/ ASX200 index was up 24.1 points, or 0.36 per cent, to 6,636.7 at noon on Tuesday, while the All Ordinaries was up 27 points, or to 0.4 per cent, to 6,823.9.

The energy sector made the biggest gains, up 3.0 per cent as crude prices rose on low volume due to the US holiday.

Woodside gained 4.5 per cent to $32.68, Santos climbed 2.1 per cent to $7.605 and Beach advanced by 1.9 per cent to $1.7725.

The mining giants also enjoyed a strong morning, with BHP up 1.2 per cent to $40.38 and Fortescue rising 1.4 per cent to $17.305.

Regis Resources rose 10.5 per cent to $1.6025 after the goldminer announced record production in the June quarter.

The big banks were lower, with ANZ down the most, by 1.1 per cent to $22.04, ahead of the RBA’s monthly monetary policy decision announcement at 1430 AEST.

Many economists expect a 50 basis point hike in the cash rate, with RBA governor Phil Lowe seeming to rule out a bigger rise in a speech last week.

“Although it’s very unlikely that RBA will shock the market as it did four weeks ago, the RBA’s stance from this meeting will be crucial for the market to access the path ahead,” IG Markets’ Hebe Chen said.

The futures market had priced in another five rate rises during the next five months, with the cash rate finishing the year about 3.0 per cent, Chen said.

Traders will also watch to see if the RBA raises its forecast of 7.0 per cent inflation by Christmas following last week’s hotter-than-expected retail sales data.

The Aussie dollar was buying 68.85 US cents, from 68.40 US cents at Monday’s close.