Australian stocks were flat Tuesday, as investors pondered the implications of a surprise 25-point hike in interest rates.
The Reserve Bank today raised the official cash rate to 4.75% in a pre-emptive attempt to stave-off inflationary pressures.
Commonwealth Bank (ASX:CBA) raised its variable home loan rate by 0.45% as a result the interest rate hike, and Westpac (ASX:WBC) revealed it was reviewing its own rates.
The Australian dollar gained ground on the decision, and was buying 99.79 US cents as of close of trading.
But the move led to hesitation in the market, according to CommSec analyst Juliette Saly, resulting in a flat day's trade.
The All Ordinaries and S&P/ASX200 indexes both grew by less than three percentage points.
Big moves on the market included a 7.02% decline for Leighton Holdings (ASX:LEI) on a profit warning, and a 2.4% decline for Harvey Norman (ASX:HVN) due to investor fears the rate hike could impact Christmas sales.
But fellow retailers Myer (ASX:MYR) and Kathmandu (ASX:KMD) both gained ground during the day.
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