The Australian share market has dropped for a second day, falling further into the red after the Reserve Bank re-confirmed its willingness to raise rates to combat inflation.
The benchmark S&P/ASX200 index finished Tuesday down 32.5 points, or 0.42 per cent, to 7,718.2, while the broader All Ordinaries fell 32.6 points, or 0.41 per cent, to 7,959.7.
The market was in positive territory briefly in the morning but dropped steadily for two hours after the RBA released minutes confirming its board had discussed a rate hike at its most recent meeting, in mid-June.
NAB's head of market economics, Tapas Strickland, said while the minutes contained little in the way of new information, they did show the board was becoming less comfortable with its current approach of holding rates steady while waiting for inflation to ease.
Tweaks to the minutes' concluding paragraph emphasises that the RBA's August 5-6 meeting is "live" and could go either way, Mr Strickland said.
The futures market is pricing in a 50/50 chance of a rate hike by year's end.
ANZ economist Adam Boyton said there was no "smoking gun" in the report suggesting the RBA expects to hike rates in August, and ANZ continues to predict rates will remain on hold before a cut in Februrary.
But Mr Boyton agreed there was also some risk of a hike, with much depending on a second-quarter inflation readout that will be released on July 31.
Nine of the ASX's 11 sectors finished lower on Tuesday, with utilities basically flat and energy rising two per cent as Brent crude changed hands near a two-month high of almost $US87 a barrel amid fears that Israel would invade Lebanon in an all-out war with Hezbollah.
Woodside rose 3.1 per cent to a two-and-a-half-month high of $29.13, Santos added 0.8 per cent to $7.69 and Beach Energy added 0.7 per cent to $1.49.
Also, coalminers did well for a second day as a fire at Queensland's largest underground coal mine, Anglo American's Grosvenor mine, near Moranbah, burned for a third day.
Whitehaven Coal rose 5.7 per cent to a year-and-a-half-high of $8.59, Yancoal added 1.5 per cent to $7.02 and Coronado Global Resources climbed 3.9 per cent to $1.34.
Elsewhere, the Big Four banks were all lower, with NAB down 1.1 per cent to $35.69, ANZ dropping 0.7 per cent to $28.26 and CBA and Westpac both dropping 0.4 per cent, to $125.66 and $27.11, respectively.
In the heavyweight mining sector, Rio Tinto and Fortescue both dropped 0.9 per cent, to $119.63 and $21.57, respectively, while BHP fell 0.3 per cent to $43.16.
Liontown Resources rose 7.3 per cent to 95.5c after the lithium developer extended its partnership with LG Corp.
The South Korea conglomerate invested $379 million to finance Liontown's Kathleen Valley lithium project in WA and extended an offtake agreement to buy lithium from the mine once it is operational.
RPMGlobal Holdings dropped 12.6 per cent to a two-and-a-half month low of $2.42 as the mining software solutions company said it expected to post $14 million to $14.5 million in 2023/24 profit, less than previous forecasts.
One Australian dollar was buying 66.45 US cents, from 66.74 US cents on Monday.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Tuesday down 32.5 points, or 0.42 per cent, at 7,718.2
* The broader All Ordinaries dropped 32.6 points, or 0.41 per cent, to 7,959.7
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.45 US cents, from 66.74 US cents at Monday's ASX close
* 107.41 Japanese yen, from 107.44 Japanese yen
* 61.94 euro cents, unchanged
* 52.60 British pence, from 52.61 pence
* 109.82 NZ cents, from 109.34 NZ cents.
