The first rate cut in five years by the Reserve Bank of Australia failed to lift the Australian bourse out of the red by the closing bell today (18 February).
The RBA announced it will cut rates by 25 basis points to 4.1%, for the first time since 2020.
In its statement, the RBA said inflation continued to ease, with underlying inflation now expected to return to the 2–3% range a little sooner than initially thought.
The labour market has also been “surprisingly strong”, the RBA said.
However, the S&P/ASX 200 deepened its losses from the open to end the day down 56.1 points, or 0.66%, at 8,481 points.
Saxo Chief Investment Strategist Charu Chanana says that while disinflation trends have allowed the RBA to start its rate cut cycle, there is still caution on the pace of easing given the tight labour market.
“The market has been quick to adjust, with one rate cut already pushed out from the RBA expectations curve for this year and only one further rate cut now expected,” he says.
“The AUD may have room to continue its upward trajectory, both against the USD and NZD, especially with a supportive China story as well. However, Q4 wage price data and January employment data will have to continue to enforce the tight labour market message for the AUD to sustain gains.”
Sectors were mixed, with seven of the 11 lower. The energy and financial sectors were the hardest hit, falling 1.44% and 1.4%, respectively. Industrials fell 0.86%, utilities dipped 0.67% and materials edged back 0.25%.
Engineering company Monadelphous (ASX:MND) shrugged off the broader market pull to close up 5.32% at $16.42 after announcing a 41.3% year-over-year increase in net profit after tax of $42.5 million for the six months to 31 December 2024.
The company declared a interim dividend of $0.33 per share fully franked.
Many of the miners found themselves in the red by the closing bell. Diversified miners Mineral Resources (ASX:MIN) slumped 6.1% to $30.50, lithium producer Pilbara Minerals (ASX:PLS) slid 5.41% to $2.10, Whitehaven Coal (ASX:WHC) fell 4.98% to $5.34, Coronado Global Resources (ASX:CRN) retreated 4.58% to $0.625 and New Hope (ASX:NHC) ended the session down 4.5% at $4.25.
The S&P/ASX200 is Australia’s leading share market index and contains the top 200 ASX-listed companies in terms of market capitalisation, and accounts for about 80% of the country’s equity market. The index is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalisation.
It is recognised as the institutional investable benchmark in the country.
Write to Angela East at Mining.com.au
Images: ASX & Stock
