Australian shares edged higher on Tuesday as investors awaited the Reserve Bank of Australia’s interest rate decision, with markets absorbing mixed signals from Wall Street and fresh developments in the Middle East.
The S&P/ASX 200 rose 11.9 points, or 0.1 per cent, to 8,868.4 by midday, while the broader All Ordinaries added 16.5 points, or 0.2 per cent, to 8,993.7. Both indices had changed little since the open.
Most sectors were in positive territory, led by materials and consumer stocks. Banks and energy companies were among the main decliners ahead of the RBA announcement.
RBA decision closely watched by markets
The central bank’s board was due to conclude its two-day monetary policy meeting later on Tuesday. A 25-basis-point increase in the cash rate to 4.85 per cent was widely expected, which would represent the fifth rise of the year and take borrowing costs to their highest level in about 18 years.
Investors will also examine the RBA’s updated Statement on Monetary Policy and inflation forecasts for indications of whether further increases could follow.
“Currently, futures markets imply an 80 per cent chance of a hike today and the non-trivial risk of another at the start of next year,” said Kyle Rodda, senior market analyst at Capital.com.
Commonwealth Bank has cut its forecast for Australia’s annualised economic growth by mid-2027 to 1 per cent, from 1.8 per cent.
Among the major lenders, Westpac fell 1.2 per cent to $36.74, ANZ dropped 1.1 per cent to $40.09 and National Australia Bank slipped 0.2 per cent to $40.81. Commonwealth Bank, the country’s biggest mortgage lender, gained 0.6 per cent to $166.10.
BHP was broadly unchanged at $56.77, while Rio Tinto lost 0.5 per cent to $144.83 and Fortescue declined 0.3 per cent to $14.23. Woolworths rose 0.4 per cent to $39.65 and Coles gained almost 1 per cent to $21.48.
US markets provided a mixed lead. The S&P 500 fell 0.5 per cent, the Nasdaq composite lost 1.1 per cent and the Dow Jones Industrial Average rose 0.4 per cent after investors reacted to disappointing earnings from Alphabet and Google.
Apple reported better-than-expected fourth-quarter results after the US market closed, with earnings up 12 per cent to 30.71 billion US dollars. Jamie Hanna, deputy head of investment at VanEck Australia, said Apple had been a solid performer throughout 2026 because it had largely avoided the volatility surrounding artificial intelligence and the heavy capital spending of major technology companies.
Israel and Hamas have agreed to the first phase of US President Donald Trump’s plan for Gaza, involving a ceasefire and hostage deal that could mark an initial step towards ending the Middle East war.
Brent crude was trading lower at about 104.77 US dollars a barrel following news of the developments, while spot gold rose to 3,965 US dollars an ounce. The Australian dollar was buying 70.03 US cents, down from 70.21 US cents at Monday’s close.
