The sharemarket extended losses to a five-week low ahead of a widely expected interest rate rise from the Reserve Bank, and after a surge in oil prices following a resumption of air strikes in the Middle East.<\/p>\n
The S&P\/ASX 200 Index dropped 69.70 points, or by 0.8 per cent, to a five-week low of 8627.40 at 12pm AEST, with eight of the 11 sectors weaker.<\/p>\n
The bond market is pricing in an 77 per cent chance the RBA will raise rates for a third time today by a quarter of a percentage point to 4.35 per cent, with at least one more hike priced in by the end of the year.<\/p>\n
\u201cThe RBA hiking rates today appears to be a foregone conclusion,\u201d VanEck senior portfolio manager Cameron McCormack said. \u201cThat said, we believe the market may be getting ahead of itself by pricing in another hike beyond today.<\/p>\n
\u201cWe see scope for the board to keep rates on hold \u2026 while it assesses how these increases are flowing through the economy.\u201d<\/p>\n
Oil steadied at about $US114 a barrel following a surge in price overnight price surge after an Iranian strike on an energy facility in the United Arab Emirates that left the agreed ceasefire in tatters.<\/p>\n
The eruption of fighting in the Middle East sent gold prices back down towards $US4540 an ounce. Northern Star dropped 2.8 per cent and Evolution Mining by 2.5 per cent.<\/p>\n
Meanwhile, Vault Minerals soared 3.2 per cent after it agreed to merge with Regis Resources to form the third-largest ASX-listed gold miner, in a $10.7 billion deal that will generate more than 700,000 ounces annually. <\/p>\n
Under the terms of the deal, Regis will acquire Vault via a scheme of arrangement and hold a 51 per cent stake in the new company. Regis shares dropped 5.6 per cent.<\/p>\n
Banks were all down before the RBA decision, with National Australia Bank off 0.7 per cent, Commonwealth Bank 0.9 per cent and ANZ by 1.2 per cent. Westpac slid 1.4 per cent as it reported half-year profit of $3.5 billion, up just 0.1 per cent from a year earlier period.<\/p>\n
Energy stocks got a boost from the higher oil price. Woodside Energy added 1.3 per cent, Viva Energy 1 per cent and Ampol 0.4 per cent.<\/p>\n
Stocks in focus<\/p>\n
In company news, Magellan dived 7.7 per cent amid plans to hand over its $5.3 billion Global Equities funds to Vinva Investment Management that will see it cut fees and scrap performance charges entirely. Magellan will remain the responsible entity and retain distribution, but investment responsibility will move to Vinva from early June.<\/p>\n