The Australian share market has closed slightly lower as traders digest hawkish commentary from the Reserve Bank indicating another interest rate hike is possible.
The benchmark S&P/ASX200 on Wednesday dropped 8.4 points, or 0.11 per cent, to 7,769.7, while the broader All Ordinaries fell 5.3 points, or 0.07 per cent, to 8,010.5.
While the RBA's move on Tuesday to leave rates on hold initially did not move the currency or equities markets, economists have been reassessing the chances of a rate hike in two months following the meeting.
The board's statement reiterated that anything was "on or off the table" to get inflation back to target, with RBA governor Michele Bullock telling reporters after the decision that the board had debated a rate hike but not a rate cut.
"We need a lot to go our way if we’re going to bring inflation back down,” Ms Bullock said at the media conference.
Betashares chief economist David Bassanese said the overall tone of the RBA's and Bullock's statements indicated the "material chance of a rate rise" in August, especially if the second-quarter inflation readout on July 31 was disappointingly high.
Deutsche Bank's chief economist for Australia, Phil O’Donaghoe, agreed in a separate commentary that an August rate hike was possible, depending on next week's May CPI print.
Mr Bassanese pegged the chances of a rate hike at 40 per cent, while Mr O’Donaghoe estimated they were less than 50-50.
But those odds are still much more likely than the market's implied pricing before the meeting.
Five of the ASX's 11 sectors finished lower, three finished higher and mining, tech and health care were flat.
The energy sector was the biggest gainer, rising 0.9 per cent, with uranium companies faring well after the oalition unveiled its nuclear policy, promising to build seven nuclear power plants at existing coal-fired plants.
Deep Yellow rose 4.2 per cent, Boss Energy climbed 2.2 per cent and Paladin finished 1.1 per cent higher.
In the heavyweight mining sector, Fortescue gained 0.3 per cent to $21.86, clawing back just a fraction of Tuesday's 5.2 per cent sell-off, while BHP dipped 0.1 per cent to $42.74 and Rio Tinto was basically flat at $119.21.
Goldminers were higher as the precious metal traded for $US2,331 an ounce, up about $1 from Tuesday.
Evolution gained 1.4 per cent and Northern Star climbed 0.8 per cent.
WA1 Resources soared 27.6 per cent to a three-week high of $20.69 after announcing drilling results for its niobium project in Western Australia.
Three of four big banks finished lower, with Commonwealth dropping 0.8 per cent to $126.94 and ANZ and Westpac both falling 0.4 per cent, to $29.13 and $27.12, respectively.
NAB was the outlier, adding 0.5 per cent to $36.17.
Elsewhere in the financial sector, Helia Group plunged 20.9 per cent to a six-month low of $3.34 over uncertainty about whether its contract to provide lenders mortgage insurance to Commonwealth Bank would be renewed when it expired at the end of 2025.
CBA intends to solicit other proposals for the contract, according to Helia, which has been providing LMI services to Australia's biggest bank for more than 50 years.
The Australian dollar was at a one-week high against its US counterpart, buying 66.72 US cents, up from 66.13 US cents at Tuesday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index on Wednesday dropped 8.4 points, or 0.11 per cent, to 7,769.7.
* The broader All Ordinaries fell 5.3 points, or 0.07 per cent, to 8,010.5.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.71 US cents, from 66.25 US cents at Tuesday's ASX close
* 105.27 Japanese yen, from 104.73 Japanese yen
* 62.12 euro cents, from 61.73 euro cents
* 52.47 British pence, from 52.20 pence
* 108.69 NZ cents, from 108.31 NZ cents
