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Yesterday the RBA’s rate hike was in line with expectations, which saw the share market slightly accelerate. The cash rate was raised by 0.5% or 50 basis points to 1.35%. It was the third consecutive increase, with the central bank taking an aggressive approach to taming inflation. Remember, higher interest rates make it more expensive to borrow money, and this takes some of the pressure off rising prices by discouraging spending. And while there are a few global factors contributing, there are also domestic factors contributing to inflation, such as the recent floods, the increasing number of job vacancies and strong spending.
The local market still managed to close in the green yesterday. The tech sector performed well, and this is an industry usually quite sensitive to interest rates. Real estate was the worst performing sector, which has been the case the last few rate hikes.
As for the major banks, Commonwealth Bank (ASX:CBA), National Australia Bank (ASX:NAB) and Australia & New Zealand Banking Group (ASX:ANZ) all closed slightly lower, while Westpac (ASX:WBC) closed flat. And energy outperformed as oil prices increased, before falling overnight.
Family app Life360 (ASX:360) advanced along with the broader tech sector yesterday. Bell Potter continue to maintain their Buy rating on the stock and have a $7.50 price target. 360’s current share price is $3.24. And gold miners also advanced yesterday. Regis Resources (ASX:RRL) gained after reporting record gold production in the June quarter, and other gold stocks followed its advance, including St Barbara (ASX:SBM) and De Grey Mining (ASX:DEG).
Overseas, Europeans shares were in the red in the lead up to the European Central Bank’s meeting on Thursday. The STOXX 600 closed 2% lower, with oil and gas stocks falling more than 6%. And the Euro also dropped to its lowest level in two decades on Tuesday. US equities were mixed. The Dow Jones closed slightly lower down 0.4%, the S&P500 gained 0.2%, while the Nasdaq rallied 1.8% higher.
What to watch today: