Australians sharemarket falls as traders bet on interest rate hikes

Australia’s sharemarket slipped on the opening day of trading for the week, as traders await key news on local interest rates.

The benchmark ASX 200 slipped 10.20 points or 0.12 per cent to 8,624.40, while the broader All Ordinaries dropped 11.10 points or 0.12 per cent to 8,915.

On a mixed day of trading, six sectors fell and five rose.

Leading the gains was the telecommunications sector – with Telstra up 1.23 per cent to $4.95, TPG added 0.81 per cent to $3.75 and Tuas Limited jumped 1.74 per cent to $7.03.

Lithium shares were also among the strongest performers as Liontown soared 14.77 per cent to $1.51, Mineral Resources jumped 2.63 per cent to $51.47 and PLS Group leapt 6.05 per cent to $4.03.

The rise in lithium stocks followed an investment note from UBS saying there could be a lithium deficit by late 2026.

It was a mixed day of trading for the big four banks with gains from CBA which added 0.78 per cent to $155.42 and Westpac up 0.39 per cent to $38.24.

These gains were offset by NAB which fell 0.64 per cent to $40.60 and ANZ which traded 0.74 per cent lower to $35.07.

The Aussie dollar also advanced against the greenback and was buying 66.46 US cents.

The local sharemarket slipped and the Australian dollar lifted as traders reacted to the increased chance of an interest rate rise following Tuesday’s RBA meeting.

While the board is still expected to hold rates, but the markets have swung their forecasts from an interest-rate cut to a rise by late 2026.

“Coming just a week after October’s hotter-than-expected inflation figures these developments have resulted in the Australian interest rate market now pricing in a full 25bp hike by August 2026 and a total of 36bp of RBA rate hikes by December 2026,” IG market analyst Tony Sycamore said.

Mr Sycamore said this was a significant change from a few weeks ago when markets were fully pricing in further interest rate relief in early 2026.

“Further boosting the Australian dollar last week, global risk sentiment remained positive, and key commodities were strong, best highlighted by copper futures which rose by 2.72 per cent last week, for their highest weekly close on record – a positive development for Australia’s resource-rich export economy and the AUD/USD.” he said.

HSBC chief economist Paul Bloxham warns the next interest rate move could be a hike.

“This week we expect the RBA to remain on hold, but to note that the next move may be up, rather than down – which is a change in rhetoric from the RBA,” Bloxham says.

In company news The Agency shares jumped 4.17 per cent to $0.025 after the real estate company told the market it had exceeded $1bn in residential property sales for the month of November.

Shares in Australian Vintage Limited also rose 5 per cent to $0.10 after announcing a new partnership or its United Kingdom and Republic of Ireland operation.