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ASX notches up two-day winning streak after RBA's double interest rate hike

The ASX 200 has dropped by 11pc since the beginning of this year. (Reuters: David Gray)

The Australian share market has risen for a second straight day as the Reserve Bank lifted interest rates for a third consecutive month, as widely expected.

The RBA's new cash rate target is 1.35 per cent, after today's 0.5 percentage point increase.

It was met with a positive reaction from investors. The ASX 200 index closed 0.3 per cent higher, at 6,629 points.

Some of today's best performing stocks were gold miners Regis Resources (+10.7pc) and St Barbara (+8.5pc), oil and gas companies Woodside Energy (+3.8pc) and Paladin Energy (+4.4pc).

The local tech sector also jumped, driven by Life360 (+11.3pc), Zip Co (+6.3pc) and WiseTech Global (+5.2pc).

On the flip side, Unibail Rodamco Westfield (-4pc), Lifestyle Communities (-2.6pc), Stockland (-2.7pc) and Brickworks (-2.8pc) suffered heavy losses.

Double rate hike widely expected

Practically every bank and economist anticipated the RBA would lift rates this afternoon, as it desperately tries to ease Australia's cost of living pressures.

The market is expecting the RBA to lift rates to 3pc by December. (ASX)

The nation's headline inflation rate jumped to 5.1 per cent in the March quarter (its highest level in 21 years), and is expected to surge to 7 per cent by December.

After the RBA's decision, the Australian dollar erased all of its gains from the past few hours.

By 4:25pm AEST, the local currency had slipped to 68.6 US cents on Tuesday (after hitting an intraday high of 68.94 US cents in the morning). 

"It seems the small fall in Australian [bond] yields and a lower Australian dollar reflect a case of ‘buy the rumour, sell the fact’," said Commonwealth Bank's head of international economics Joseph Capurso.

"The RBA’s post‑meeting statement was not dovish, though did mention inflation would 'decline back towards the 2-3 per cent range next year'.

"The deteriorating global economy is the main weight on Australian dollar."

Spot gold was trading at $US1,810 an ounce. It was a significant improvement on last week, when the precious metal hit a six-month low ($US1,784).

'Extremely compelling upside'

Overseas, Wall Street was closed for a public holiday on Monday (local time).

A jump in oil prices led to a surge across European energy stocks. That boosted the Stoxx 600 and Britain's FTSE indexes by 0.5 and 0.9 per cent, respectively.

Brent crude futures lifted by 2 per cent to $US113.83 a barrel.

"Some markets are starting to find their footing but there's a lot of volatility right now," Sebastien Galy, senior macro strategist at Nordea Asset Management, said.

However, asset manager Nuveen sees room for optimism after sharp market falls in the first half.

"Beaten-down public markets offer extremely compelling upside potential in the near term," the firm's Global Investment Committee wrote in its mid-year 2022 outlook.


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