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ASX200 extends losses after surprise RBA move
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Qantas picks first female CEO; shares drop
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Energy and mining companies leading losses
(Updates to close)
By Rishav Chatterjee
May 2 (Reuters) - Australian shares dropped to hit a
three-week closing low on Tuesday after the central bank decided
to surprise markets with an unexpected quarter-point rate hike
when most traders had positioned themselves for a pause.
The S&P/ASX 200 index ended 0.9% lower at 7,267.4 points to its lowest level since March 20.
The Reserve Bank of Australia, earlier in the day, stunned markets by raising its cash rate 25 basis points when traders had looked for an extended pause, saying inflation was way too high and higher rates might be need to bring it under control. "The market isn't going to like this result given that it heavily priced in another pause but if we look overseas, one can see inflation has not been easy to fight," said Josh Gilbert, market analyst at eToro AUS Capital Limited. More than 75% of economists, or 26 of 34 polled in April 26-28 Reuters survey, expected the RBA to hold its official cash rate at 3.6% at its meeting on May 2.
Traders will be looking for further cues on the monetary policy tightening stance with U.S. Federal Reserve and European Central Bank announcing their rate decisions over the course of a week. Back in Sydney, Qantas picked its inaugural female chief executive officer, promoting finance head Vanessa Hudson. Shares of the country's century-old airline closed 3% lower.
Energy stocks fell 1.5%, reflecting uncertain oil prices with sector majors Woodside and Santos , closing the day down 1.6% and 1.1% respectively.
Miners tracked the broader market sentiment, falling 1.0% by the end of trade. Iron ore behemoths BHP Group , Rio Tinto and Fortescue Metals closed between 0.5% and 1.2% lower. Banks ended the day 0.5% lower, tracking weakness in financial shares in Tokyo, Sydney and Hong Kong after the seizure of First Republic Bank by U.S. regulators sparked fresh worries over the stability of the banking sector.
Other major sub-indexes including gold , healthcare and real-estate stocks traded in red and closed down 0.6%, 0.4% and 2.1%, respectively. New Zealand's benchmark S&P/NZX 50 index rose 0.3% to finish the session at 12,0.37.8.
(Reporting by Rishav Chatterjee in Bengaluru; Editing by Sherry Jacob-Phillips)
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