ASX jumps after RBA cuts rates; Star rescues deal; Westpac appointment

Welcome to your five-minute recap of the trading day.

The numbers

The Australian bourse has finished higher, buoyed by banking and discretionary stocks following a widely expected interest rate cut from the Reserve Bank of Australia.

The S&P/ASX 200 climbed 36 points, or 0.4 per cent, to 8880.8 at the close on Tuesday, as the broader All Ordinaries ended the session 32.7 points higher, or 0.4 per cent, to 9150.3. Eight of the 11 sectors finished in positive territory.

The Australian dollar is buying US65¢, down from US65.24¢ on Monday at 5pm.

The lifters

Interest rate-sensitive financial and discretionary stocks led the index higher, with both 0.8 per cent up.

The Star Entertainment Group was a discretionary standout, up 23.6 per cent after securing a deal to sell its stake in the Queen’s Wharf Casino in Brisbane to the Asian partners in this venture.

Star has been locked in negotiations over plans to sell its 50 per cent stake in the casino to Chow Tai Fook Enterprises and Far East Consortium, as it scrambles to reduce debt and survive a financial crunch.

Star had been unable reach an agreement with the parties before a key deadline two weeks ago, but on Tuesday it said it had entered into a $53 million binding deal. The Financial Review first reported the news.

JB Hi-Fi finished 5.6 per cent higher, while Wesfarmers was 0.2 per cent and Aristocrat Leisure 1.2 per cent stronger.

Financial stocks extended their gains, with the big banks all in the green, led by ANZ’s 2.2 per cent jump. Commonwealth Bank edged 0.1 per cent higher and NAB was up 1 per cent. Westpac added 0.9 per cent as it announced it had appointed Carolyn McCann as the new chief executive of its consumer banking arm, which is one of the most senior roles in group. McCann, who has been acting in the job since May, was previously the group executive in charge of customer and consumer services.

Westpac chief executive Anthony Miller said that under McCann’s leadership, the bank’s operations team had reduced mortgage approval times, improved complaints handling, and beefed up scam protection.

“Carolyn is an outstanding executive, and I have seen firsthand her ability to engage and galvanise high-performing teams to deliver results,” Miller said.

The big miners were stronger. BHP was 0.9 per cent higher, while Rio Tinto and Fortescue were both up 1.2 per cent.

Outdoor media company oOh!Media’s shares jumped 0.3 per cent after it announced it had recruited SBS managing director James Taylor to become its new chief executive. Taylor will leave SBS later this year and will take over from oOh!Media chief Cathy O’Connor in early 2026.

The laggards

Seven Group Holdings was the day’s biggest loser, down 8.5 per cent, on the back of the $21 billion industrial conglomerate reporting a 9 per cent jump in its profit (before significant items) of $924 million, but that it would not continue to deliver something close to double-digit earnings growth for the current financial year.

Seven West Media shares also took a hit, closing 6.6 per cent lower as profits suffered another steep fall, down a further 63 per cent to $16.6 million amid a prolonged slide for the television industry, its primary business.

Revenue for the company, majority-owned by Kerry Stokes, which controls the Seven Network and The West Australian, dropped 4 per cent to $1.4 billion after a commercial deal with Meta was not renewed, and amid ongoing declines to free-to-air television advertising.

Energy stocks were mixed. Yancoal rose 0.6 per cent, Santos added 0.8 per cent and Woodside finished the day flat.

Shares in payments business Tyro were placed in a trading halt after soaring 10.5 per cent on Tuesday. Following a “price query” from the ASX, Tyro said it needed time to develop an appropriate announcement to inform the market, and it asked for trading in its shares to be halted until the earlier of Thursday morning or when the announcement was released.

The lowdown

The central bank opted not to shock markets for a second time in two months on Tuesday, and cut the cash rate by 25 basis points to 3.6 per cent – the third reduction in six months.

The move brings the cash rate to its lowest level since May 2023, with the average variable mortgage rate expected to fall to 5.5 per cent.

Most economists had expected the Reserve to deliver further rate relief in its July meeting.

The Reserve Bank board in its statement noted uncertainty in the global economy was still high.

But markets had settled down in recent months, with a little bit more clarity to the scale of Donald Trump’s tariffs and a relative low amount of retaliation from other countries.

“Trade policy developments are nevertheless still expected to have an adverse effect on global economic activity, and there remains a risk that households and firms delay expenditure pending still greater clarity on the outlook,” the statement said.

Economists anticipate two more reductions by March 2026, bringing the cash rate to 3.1 per cent, and expect an extended pause thereafter. Others see it falling below 3 per cent.

“Despite lowering the cash rate today, monetary policy remains restrictive and this policy setting continues to weigh on growth and inflation,” said Adam Bowe, executive vice president and head of Australia Portfolio Management at PIMCO. “The RBA easing cycle is far from complete.”

The Reserve’s cut comes as global policymakers grapple with the implications of higher US tariffs on inflation and economic growth. Federal Reserve officials have kept rates unchanged this year as they assess whether the tariff shock will trigger sustained price pressures. At the same time, the US labour market – the other half of the Fed’s dual mandate – shows signs of losing momentum.

Overnight, US stocks edged back from their record heights in Wall Street’s final moves before a coming update on inflation.

“The market’s reaction to any surprises in the numbers could be exaggerated – especially if a significantly hotter-than-expected CPI print leads traders to believe the Fed may not cut rates at its next meeting,” said Chris Larkin at E*Trade from Morgan Stanley.

On Tuesday (US time), the US government will report how bad inflation was across the country in July. Economists expect it to show US consumers had to pay prices for groceries, petrol and other costs of living that were 2.8 per cent higher from a year earlier, a slight acceleration from June’s 2.7 per cent inflation.

Inflation has remained above 2 per cent, even if it has improved substantially from its peak above 9 per cent three years ago. And the worry is that President Donald Trump’s tariffs could push inflation higher.

That in turn is raising fears about a potential worst-case scenario called “stagflation”, in which the economy stagnates but inflation remains high. The Federal Reserve has no good tool to fix both at once, and it would need to concentrate on either the job market or inflation first. But helping one of those areas by moving interest rates would probably hurt the other.

A top Fed official, Michelle Bowman, said on Saturday that she believed the job market was the bigger concern. She is still backing three cuts to interest rates by the Fed this year following this month’s weaker-than-expected report on the US job market. Trump has also been angrily calling for cuts to interest rates to support the economy.

Other Fed officials, led by chair Jerome Powell, have been more hesitant. Powell has said he wants to wait for more data about how Trump’s tariffs are affecting inflation before the Fed makes its next move, and Tuesday’s update on the consumer price index may offer a big clue about that.

With AAP, AP, Bloomberg

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