Australia shares change gears to inch higher after RBA hikes rates as expected

Australian equities edged up on Tuesday after the Reserve Bank of Australia lifted its cash rate to 4.85%, a level not seen for nearly 18 years, as markets had anticipated. Business Recorder reported that the S&P/ASX 200 stood 0.2% higher at 8,872.30 by 0345 GMT, recovering after it had been down 0.1% before the announcement. The bank said earlier increases had tightened financial conditions, while dropping wording that had allowed for another rise if required.

The RBA has raised rates by 125 basis points this year, reversing the 75 basis points of easing carried out in 2025. Financial shares advanced 0.4%, while real estate and consumer discretionary stocks gained 1% and 0.5%; miners also moved higher as copper prices improved. Airlines benefited after oil fell 7% overnight, with Qantas up 6.3% and Virgin Australia 7.7%, while energy shares fell 3.2%. New Zealand’s S&P/NZX 50 was little changed at 13,700.02.