AAP Finance

Australian shares higher as central bank cuts rates

By AAP Newswire

Aug 12, 2025

ASX STOCK — Australian shares have gained 0.4 per cent after the Reserve Bank cut interest rates. -AAP Image

The Australian share market reached record highs after the Reserve Bank of Australia came through on a widely-expected third interest rate cut of the year.

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The S&P/ASX200 had 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 0.36 per cent, to 9150.3.

In a unanimous decision, the central bank board cut interest rates by 0.25 percentage points on Tuesday, to 3.6 per cent.

The ASX200 climbed to new heights after the mid-afternoon announcement while the Australian dollar dipped against the greenback, before bouncing back.

More monetary easing is expected in coming months but opinions on numbers and timing vary among economists and analysts.

AMP chief economist and head of investment strategy Shane Oliver expects three more cuts in the cycle, easing that he broadly views as a positive for local shares.

"Providing recession is avoided, RBA rate cuts are positive for Australian shares because they help boost future profit growth and make shares relatively more attractive relative to cash," he wrote in a note.

While he views a recession as unlikely, stretched valuations and US President Donald Trump's trade wars will "no doubt make for a volatile ride".

Investors will have a better understanding of the implications of tariff policies on the US consumers following inflation numbers overnight.

Eight of 11 local sectors closed higher, led by discretionary, financial and utilities segments.

The Star Entertainment Group was a discretionary standout, up 23.6 per cent by the closing bell after striking a deal to sell its share of Queen's Wharf casino in Brisbane.

JB Hi-Fi shares also posted a firm 5.6 per cent increase.

All big four banks closed higher, led by ANZ, which clocked a 2.2 per cent increase, landing at $31.93 a share.

Commonwealth Bank was modestly higher at 0.1 per cent, to $178.80, ahead of its full-year results on Wednesday.

Both NAB and Westpac finished one per cent higher, to $39.19 and $34.63 respectively.

Mining giant BHP ended the session one per cent higher, at $41.26.

Rio Tinto picked up 1.2 per cent, to $116.72, and Fortescue rose 1.2 per cent, to $19.66.

ON THE ASX:

* The S&P/ASX200 rose 36 points, or 0.4 per cent, to 8880.8 on Tuesday.

* The broader All Ordinaries closed 32.7 points higher, or 0.36 per cent, at 9150.3.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 65.00 US cents, from 65.24 US cents