ASX 200 Declines Amid RBA Rate Hold and Inflation Concerns

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Initially, the market responded positively at 2:30 pm following the RBA's decision to maintain the cash rate at 3.6%. However, the sentiment shifted negatively as RBA Governor Michele Bullock addressed the media, noting the risk of inflation possibly exceeding the central bank's target of 2-3% for an extended period. Bullock reiterated the central bank's stance, explaining that while monetary policy remains somewhat tight, technical forecasts suggest only a gradual fall in inflation.

Kyle Rodda, a senior analyst at Capital.com, emphasised that the RBA is aware of the inflationary pressures possibly persisting longer than anticipated. As a result, market expectations for further rate reductions diminished, with traders adjusting to the RBA's projections which hint at potential rate cuts mainly due to technical considerations.

The ASX downfall encompassed almost all of its sectors, with utilities experiencing the steepest decline of 2.78%. Companies such as Origin Energy and AGL Energy saw their shares decrease by 3.8% and 3.73%, respectively. Mining shares also suffered, with BHP slipping 1.91% and Rio Tinto down 2.59%.

In the financial sector, results were mixed as Westpac saw a rise of 1.51%, whereas other major banks like Commonwealth Bank and NAB recorded losses. The real estate sector, sensitive to interest rate changes, fell 1.18% as investors adjusted to the unchanged rate stance.

Globally, the scenario wasn't much different; Wall Street exhibited mixed results, influenced by its own set of economic factors. On Monday night, the Dow Jones Industrial Average fell by 226 points, while the S&P 500 and Nasdaq indices managed small gains.

On the corporate front, City Chic Collective reported promising sales results, propelling its stock price by 8.75%. Conversely, G8 Education experienced a significant drop of 13.04% following news of declining occupancy rates. Among other notable movements, DroneShield surged 8.6%, marking it as the best performer on the ASX200, while Boss Energy saw a 5.9% decline.

The Australian dollar remains at US65.1 cents, reflecting ongoing currency market dynamics amidst the local and global economic developments.

Published:Tuesday, 4th Nov 2025
Source: Paige Estritori

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