The Australian sharemarket edged higher on Tuesday after a rally in tech stocks saw the benchmark shrug off concerns the Reserve Bank may have to hike rates again before year’s end.
The S & P/ASX200 rose 29.6 points or 0.4 per cent to reach 7056.1 points at the closing bell, while the All Ords also climbed 0.4 per cent to 7244.4 points.
Across the benchmark, seven of 11 sectors finished in the green. Tech stocks were the star performer, rising 1.3 per cent, while the healthcare sector slumped 1.2 per cent.
Tech sector heavyweights Xero jumped 2 per cent to $116.25, Megaport rose 3.7 per cent to $11.46, and Wistech added 1 per cent to $62.64.
Minutes of the October board meeting released by the RBA on Tuesday took a more hawkish turn, after the central bank gave a clear indication it could lift the official cash rate on Melbourne Cup day.
In a new addition to the statement, the minutes noted that the board had a “low tolerance for a slower return of inflation to target than currently expected”.
Capital Economics’ head economist for Asia-Pacific, Marcel Thieliant, said the minutes indicated the RBA was becoming increasingly concerned price pressures would stay higher for longer, requiring further monetary tightening.
“All this suggests that the bank will lift the cash rate again if the September quarter inflation data, due next week, are stronger than the RBA had anticipated. We think they will be,” he said.
But while the statement indicated that a rate rise was in play, other economists said a move higher by the central bank still remained unlikely.
“Our view is that a rate rise in November would require an uncomfortably high CPI print, possibly combined with some sign of strength in the labour market [ …] Risks of RBA action appear to be rising, however,” ANZ’s head of Australian economics Adam Boyton said.
In company news, aftermarket auto parts retailer Bapcor plunged 11.5 per cent to $5.91 after it announced that its profits in the year to September were below expectations.
Meanwhile, shares in Cochlear fell 0.5 per cent to $253.90 after the company announced its profit guidance did not include a planned acquisition of Oticon Medical’s cochlear implant business.
Syrah Resources climbed 1.1 per cent to 47.5¢ after the graphite miner announced that demand for its graphite anode material in the September quarter was strong.