ASX jumps ahead of RBA meeting, new survey shows split public opinion on rate hike

Australian shares have risen sharply after falling for three consecutive sessions, as energy and banking stocks rally, with investors awaiting another potential interest rate hike by the Reserve Bank to tame runaway inflation.

The ASX 200 closed up 73 points or 1.1 per cent, to 6,613.

Meanwhile, the Australian dollar was up, at 68.31 US cents, by 04:15pm AEST.

Financial stocks gained almost 1 per cent, with the so-called “Big Four” banks climbing between 0.8 per cent and 1.3 per cent.

Investors’ focus is on the central bank’s decision on Tuesday — with a Reuters poll predicting that it will deliver another 0.5 percentage point (or 50 basis points) interest rate hike — marking the first time it has ever raised the cash rate by that magnitude at consecutive meetings.

However, the public sentiment split on the RBA’s hawkish stance.

A new survey of 1,000 home owners and renters by Canstar shows that, overall, 39 per cent supported the RBA’s decision to lift interest rates as hard and fast as it has recently while 37 per cent disagreed.

Home owners with mortgages (46 per cent) constituted the strongest voice against rapid rate rises, compared with just 24 per cent of people who own their home outright.

And 41 per cent of renters felt interest rates should not be rising so rapidly while 33 per cent were unsure about the RBA’s approach.

Steve Mickenbecker from Canstar said the struggle to balance the household budget was weighing heavily on Australians and undermining support for the rapid pace of interest rate increases.

“Home loan borrowers who are hit directly in the hip pocket by rising interest rates are naturally more opposed to the increases than the general community,” he said.

“Conversely, many baby boomers who are likely to be living at least partially on interest earnings and struggling with inflation on a fixed income, tip to the positive side, with 46 per cent of those in their 60s supporting the fast pace and succession of rate rises.

“The gap between borrowers opposing the pace of rate rises compared with savers supporting it, is clear. Self-interest drives both positions.”

Mr Mickenbecker added there was still a considerable proportion of savers who were against the pace of interest rate increases and must be taking a broader view of the state of the economy and prospects for the future.

Gold stocks rebound
On Monday, gold stocks bounced back after two straight weeks in the red, advancing 2.6 per cent, with sector heavyweights Newcrest Mining and Northern Star Resources rising up to 2.3 per cent and 3.7 per cent, respectively.

Mining and energy stocks followed suit, to gain 0.2 per cent and 2.6 per cent, respectively.

Santos jumped 3.3 per cent, to $7.45, and Woodside Energy gained 2.7 per cent, to $31.26.

Technology stocks added 1.6 per cent, tracking a strong finish on Wall Street on Friday, ahead of the holiday long weekend.

Tech companies such as Block (+5.1 per cent) and Life360 (+2.5 per cent) were among the top movers.

Link Administration said it would not recommend Canadian cloud-based software firm Dye & Durham Ltd’s lowered takeover bid but agreed to continue to engage with its suitor. Its shares were down 0.3 per cent.

Magellan was leading the losses on Monday, plunging almost 10 per cent, to $11.71, while Pointsbet slumped by 6.3 per cent, to $2.70, and Pendal Group dipped 2.5 per cent, to $4.37.

Wall Street late rally
The second half of the year started with gains in global stock indexes on Friday, ahead of the US holiday long weekend, while the 10-year US Treasury yield fell the most since COVID-19 hit markets in March 2020.

Copper prices slumped to their weakest in 17 months.

Stocks were lower early in the New York session but rallied late to end higher.

US markets were closed on Monday for the July 4th holiday.

“It’s a Friday before a long weekend, so market movements can be somewhat exaggerated,” chief market economist at Spartan Capital Securities in New York Peter Cardillo said at the end of last week.

Mr Cardillo said he expected stock market performance to improve overall in the second half of the year.

“We’re going to see more green days in the second half than we’ll see red,” Mr Cardillo said.

The US benchmark S&P 500 — which, on Thursday, closed out its worst first-half since 1970 — climbed 1.1 per cent.

MSCI’s world stocks index, which on Thursday notched its biggest percentage decline for the first half of the year since its 1990 creation, rose 0.4 per cent.

The Dow Jones Industrial Average rose 321.83 points, or 1.05 per cent, to 31,097.26, the S&P 500 gained 39.95 points, or 1.06 per cent, to 3,825.33, and the Nasdaq Composite added 99.11 points, or 0.9 per cent, to 11,127.85.

On the other side of the globe, the pan-European STOXX 600 index lost 0.02 per cent and MSCI’s gauge of stocks across the globe gained 0.4 per cent.

Oil prices climbed amid supply outages in Libya and expected shutdowns in Norway, which offset worries that an economic slowdown could dent demand.

Brent crude oil was slightly up, trading at $US112.24 a barrel, by 04:26pm AEST.