ASX 200 eases as bank stocks drag after RBA rate rise to 18-year peak

what happened

The S&P/ASX 200 slipped 0.5% to 8,844.20 points by 2327 GMT on Wednesday, according to Reuters, as lenders pulled the index lower. Financials shed 0.7%, heading for their weakest session since mid-October, with ANZ falling between 0.4% and 1.2% among the Big Four banks. The move followed the Reserve Bank of Australia's decision the day before to raise its rate by 25 basis points.

Traders read the central bank's removal of any reference to further hikes as a sign the tightening cycle could be ending, yet borrowing costs remain near two-decade highs. Miners slipped 0.2% as softer copper weighed on Rio Tinto, BHP and Fortescue, each down roughly 1%, while technology gained 1.4% in line with Nasdaq. In New Zealand, the S&P/NZX 50 was little changed at 13,721.75 points, and unemployment climbed to 5.7% in the third quarter, the highest since 2015.

why it matters

Borrowing costs at their highest in nearly two decades keep pressure on consumer-facing stocks and bank earnings expectations. The absence of a tightening signal, however, has led some to expect a pause. Investors are also watching the US midterm results and concerns that recent attacks could hinder efforts to end the US-Iran conflict.

market impact

Australian banks and ASX 200: high borrowing costs and a bank-led selloff weigh on the index

• ▼Australian banks pressure down — borrowing costs stay near two-decade highs and financials fell 0.7%

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