Sydney, May 6, 2026, 03:05 AEST
- The S&P/ASX 200 slipped 0.2% to finish at 8,680.50, reacting after the Reserve Bank of Australia bumped rates up to 4.35%.
- Banks and miners weighed on the market. Westpac dropped after missing first-half profit estimates and flagging rising energy costs.
- Investors are debating if the RBA will hit pause or have to tighten further, should the Middle East oil shock keep inflation elevated.
Australian shares slipped on Tuesday, the S&P/ASX 200 easing 0.2% to finish at 8,680.50. Earlier losses had been deeper, with the index down as much as 0.9% at one point. A rate hike from the RBA, widely anticipated by the market, weighed on both banks and miners.
The RBA’s 25 basis point hike—a quarter-point bump—takes the cash rate to 4.35%, landing as the third increase this year. The central bank cited the impact of higher fuel and commodity prices tied to the Middle East conflict, noting some companies are already passing along those added costs, pressuring inflation.
Equities found themselves squeezed by conflicting cues. Rates have climbed to levels that should dampen demand, yet inflation is still lingering. The RBA flagged that risks—especially around inflation expectations—are skewed to the upside, even as it described current policy as “well placed” to handle what comes next following the series of hikes. Reserve Bank of Australia
Governor Michele Bullock’s remark that policymakers had “space to be alert to both sides of the risks” was enough to pull back expectations for a rapid follow-up hike. The Australian dollar eased 0.3% to $0.7145. Three-year government bond yields lost 5 basis points, finishing at 4.625%, according to Reuters. Reuters
Financials lost 0.5%. Shares of Westpac shed almost 2% after the country’s number two home lender came up short of first-half profit forecasts. The bank posted net profit of A$3.41 billion for the half, trailing the A$3.47 billion estimate from Visible Alpha. Credit impairment charges rose to A$443 million, versus A$250 million this time last year.
Anthony Miller, Westpac’s Chief Executive, flagged persistent hurdles from rising global energy prices, cautioning that businesses will be squeezed for some time. “The longer the war goes on there will be more disruption,” he said, adding supply probably won’t snap back to pre-war levels. Reuters
National Australia Bank came in with disappointing first-half cash earnings, falling short of expectations on Monday. Of the A$706 million credit impairment charge, NAB attributed roughly A$300 million to possible future bad loans tied to the war. “Very challenging” is how Chief Executive Andrew Irvine described the environment for businesses of all sizes. Reuters
Mining names pulled back too. BHP lost 0.4%, Rio Tinto eased 0.3%. Gold stocks ended down 0.8%. Regis Resources slipped after it announced an all-scrip merger with Vault Minerals, aiming to form a gold producer valued at A$10.7 billion. Vault holders get 0.6947 Regis shares for each of their own.
The gold tie-up handed traders a straightforward story, though it barely nudged sentiment. Regis and Vault projected annual output above 700,000 ounces from five Western Australia sites, said they had no drawn debt, and pointed to over A$500 million in potential corporate tax breaks for the merged entity.
Some corners of the market managed to push higher. Energy names climbed 0.9%, technology tacked on 0.8%—both benefiting from the oil-price spike squeezing consumers and hitting rate-sensitive stocks. That divergence kept the session from feeling as lopsided as the index move alone might imply.
Cliff Man, CEO at ETF Shares, pointed to “a longer Iran conflict” showing up in market pricing, warning that expensive energy could push the RBA toward tighter policy. But TD Securities senior rates strategist Prashant Newnaha didn’t see strong signals for a near-term move, arguing there’s little to indicate the central bank will act at its next meeting. The Business Times
Belinda Allen, CBA’s Head of Australian Economics, said the RBA could afford to sit back and monitor how the Middle East conflict shakes out for the economy—supporting the view rates might remain steady through 2026. Still, she cautioned, “a further rate hike cannot be ruled out, depending on the data.” CommBank
There’s a double-edged risk here. Persistent strength in energy prices could keep inflation stuck above target, which might push the RBA to tighten further. On the flip side, if consumers and businesses suddenly cut back more than expected, growth and jobs could tumble. The RBA is projecting headline inflation to hit a peak of 4.8% by mid-2026, with underlying inflation still above 3% through mid-2027.
