Aussie Stocks Retreat to 5-Month Lows

Australian equities rose modestly on Wednesday morning session, with the benchmark ASX 200 hovering near 8,945 after a muted prior session. Sentiment was lifted by firmer U.S. futures ahead of the Federal Reserve’s first policy decision under new Chair Kevin Warsh later today. Locally, the Reserve Bank held its cash rate steady at 4.35% on Tuesday, as expected, noting the impact of three hikes since January but keeping the door open to further tightening should inflation persist. However, gains were capped by official warnings that an El Niño in Australia has formed in the Pacific and could intensify into one of the strongest in decades by late 2026. Gains in consumer stocks, non-energy minerals, and logistics helped offset weakness in energy, retail, and transport. Early standouts included Evolution Mining (up 2.9%), Mineral Resources (2.8%), Wisetech Global (2.2%), and Sonic Healthcare (1.0%). The four major banks added between 0.3% and 1%, contributing to the modest advance.

The ASX 200 closed little changed at 8,918 on Tuesday, as strength in commercial services, energy, and financials offset declines in consumer staples, transport, and retail. Markets recovered from early losses after the Reserve Bank of Australia held its cash rate at 4.35%, as expected. The central bank also warned that inflation remains above target despite three hikes this year, signaling readiness to tighten further if pressures persist. In top trading partner China, fresh data were mixed: May retail sales missed forecasts, but industrial output accelerated, and the jobless rate hit a five-month low. Northern Star Resources (2.5%), Cochlear (2.1%), and Perseus Mining (1.5%) led gains, while the big four banks rose between 0.2%–0.9%. On the downside, PLS Group fell 4.6%, followed by South32 Ltd. (-4.5%), Wisetech Global (-3.9%), and Technology One Ltd. (-2.1%). Traders now brace for the U.S. Fed's first policy meeting under new Chair Kevin Warsh, with its rate decision due Wednesday.

Australian shares fell 70 points or 0.8% to 8,844 in early Tuesday trade, snapping a two-session rally as investors booked profits after the local market hit an over seven-week peak in the previous session. Sentiment also turned cautious ahead of key data releases later in the day from main trading partner China, including new home prices, industrial output, retail sales, and unemployment figures. In the U.S., equity futures drifted lower before the Federal Reserve’s first policy meeting under new chair Kevin Warsh, with a rate decision due Wednesday. Still, losses were partly contained by expectations that the Reserve Bank of Australia today would hold cash rates steady after three hikes since January. Sector weakness was broad, led by transport, retail trade, logistics, and financials. Notable laggards included Transurban Group (-3.6%), PLS Group (-2.6%), Sonic Healthcare (-2.4%), and Bluescope Steel (-1.3%), while the four major banks slipped between 0.6% and 1.8%.