The Australian stock market was narrowly higher at noon despite a rise in oil prices, after yet another effort to reopen the Strait of Hormuz came to nothing.
The benchmark S&P/ASX200 index rose 25.1 points on Monday to be up 0.29 per cent to 8,690.1, as the broader All Ordinaries advanced 17.1 points, or 0.19 per cent, to 8,862.7.
The cautious start to the week comes ahead of a Reserve Bank monetary policy decision on Tuesday, with markets pricing in a 90 per cent chance that the cash interest rate will be raised by 25 basis points to 4.6 per cent.
“With oil prices surging near $US105 a barrel and sticky price pressures persisting, the central bank’s commentary will be heavily scrutinised for signs of a ‘higher for longer’ stance,” Moomoo market strategist Tapas Strickland said.
On Wednesday, August’s inflation print could indicate whether or not the RBA delivers a follow-up increase in November.
“A third rate hike is almost priced-in this time next year, carrying the strong implication that the cash rate could breach five per cent – the highest level since the 2008 global financial crisis,” Mr Strickland said.
Six of 11 market sectors were trading higher by noon but IT stocks lagged following sharp dips in data centre stocks NextDC and Megaport.
The heavyweight financials sector jumped one per cent as NAB led the big four banks higher, while Macquarie rallied 1.6 per cent to $243.42 after RBC Capital Markets maintained its ‘outperform’ rating for the investment giant with a share price target of $300.
The energy sector fell 0.2 per cent, with oil prices roughly on par with Friday afternoon after they eased on hopes Iran proposed a deal to reopen the Strait of Hormuz for seven days, before reversing when the idea was trashed by US President Donald Trump.
At a company level, oil producer Karoon Energy tumbled almost 13 per cent after a recent electrical fault sparked a guidance downgrade.
Mining stocks were sluggish, with raw materials down 0.3 per cent as retreating copper prices weighed on BHP and Rio Tinto.
Gold producers were mixed but mostly lower, as the precious metal slumped to $US4,220 ($A6,014) an ounce, with high bond yields drawing investors away from non-yielding assets.
Northern Star shares soared more than 10 per cent in early trade after confirming it received a takeover bid from South African group Gold Fields that valued it at $38.7 billion. Still, it knocked back the offer.
Consumer-facing stocks were slightly better than flat, and the health care segment outperformed thanks to strong leads from Telix and Cochlear.
In company news, Synlait Milk reported a full-year net loss after tax of $NZ75.4 million ($A60.9 million) following another difficult financial year for the company.
Meanwhile, DroneShield appointed audit and risk expert Lynne Saint to its board as a non-executive director.
The Australian dollar was buying 70.18 US cents, down from 70.24 US cents on Friday at 5pm.
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