‘Inflation has fallen substantially': ASX jumps on RBA announcement
The Australian sharemarket rose during Tuesday's rating after the Reserve Bank of Australia reduced interest rates to their lowest levels since May 2023.
The benchmark ASX 200 index finished 48.20 points or 0.58 per cent higher to 8,343.30.
The broader All Ordinaries also rose, up 48.60 points or 0.57 per cent to 8,573.40.
The Australian dollar fell on the back of the RBA's rate cut and is now buying 64.18 US cents.
Australia's sharemarket extended its early jump after the RBA cut the official cash rate by 25 basis points to 3.85 per cent, moving rates back below the 4 per cent mark for the first time since 2023.
While this was widely tipped by markets and economists alike, the RBA governor Michele Bullock said the decision was 'unanimous' while leaving the door open for further rate cuts, citing a promising inflation outlook.
'Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance,' the Board said in its 2.30pm statement.
This helped lift eight of the 11 sectors into the green, with information technology, property and telecommunications sectors leading the way.
Technology One soared 11.33 per cent to $36.76 while Xero Limited rose 0.46 per cent and WiseTech Global jumped $2.68 per cent to $102.07.
Stocklands shares also rose 0.73 per cent to $5.55, while The GPT Group is up 0.85 per cent to $4.72 and Mirvac Group rose 1.78 per cent to $2.29.
The major banks also all finished in green.
CBA continued its momentum, trading 0.62 per cent higher to $172.43, NAB jumped 1.00 per cent to $37.21, ANZ is up 1.27 per cent to $28.76, Westpac closed 0.41 per cent higher to $31.50 and Macquarie Group climbed 2.01 per cent to $208.09.
Capital.com senior financial market analyst Kyle Rodda said the RBA cut was expected by the market was buoyed by the surprising dovish commentary and forecasts.
'Global uncertainty was written all over the central bank's Statement on Monetary Policy, with growth and inflation forecasts lowered and forecasts for the unemployment rate lifted,' he said.
'Governor Bullock also stated the board tabled a 50 basis point cut at this meeting.
'While slightly ominous for the Australian growth outlook, the news boosted market sentiment, with the cut to trimmed mean inflation forecasts from 2.7 to 2.6 per cent all but signalling the RBA thinks it's close to calling mission accomplished on inflation.'
AMP economist Shane Oliver said he now expects the board to cut interest rates three more times by early next year.
'We continue to see further rate cuts ahead as we see economic growth picking up more slowly than the RBA is forecasting, monetary policy remains tight and annual underlying inflation is close to being back at the midpoint of the target range earlier than the RBA was previously expecting,' he wrote in an economic update.
In company news Telstra shares rose 2.2 per cent to $4.66 after announcing it was lifting the majority of its NBN and postpaid mobile plans by between $3 to $5.
On the flip side, shares in Kogan were among the most heavily traded after the company announced a fall in profitability for its New Zealand business Mighty Ape.
Shares fell 8.9 per cent to $4.12 on the announcement.
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