Sydney, May 6, 2026, 18:11 AEST
Australian stocks rebounded Wednesday, snapping a two-day slump as the S&P/ASX 200 jumped 1.3% to finish at 8,793.60. That’s the highest close since early April, with banks and miners driving the gains. Risk sentiment got a boost after signs emerged of movement on a U.S.-Iran agreement.
This shift landed just a day after the Reserve Bank of Australia lifted its main cash rate by 25 basis points, bringing it to 4.35%. (A basis point equals one-hundredth of a percentage point.) The RBA pointed to climbing fuel and commodity prices tied to conflict in the Middle East, warning these were already feeding inflation. Some businesses, it noted, are trying to push those higher costs onto customers.
Wednesday’s rally put to the test whether investors could shrug off tighter monetary settings. Governor Michele Bullock, following the decision, noted the RBA now has “space to be alert to both sides of the risks.” Markets dialed back bets on imminent tightening, but another rate hike later this year is still on the table. Reuters
Banks took the spotlight, with financials jumping 2.39%. Westpac surged 3.5%, ANZ rose 3.1%, Commonwealth Bank put on 3.0% and National Australia Bank advanced 2.8%. Moves from the Big Four tend to punch above their weight given their dominance on the index, so this bounce packed more punch than a broad-based but lighter rally.
Miners carried the load, lifting the materials sector 2.48% thanks to firmer iron ore prices. Fortescue advanced 3.1%, matched by BHP’s 3.1% gain, with Rio Tinto up 2.3%. Energy, though, slipped 2.05% as weaker oil prices put pressure on the sector.
Data-centre stocks added fresh momentum. DigiCo Infrastructure REIT jumped after announcing plans to offload its Chicago data centre for $750 million, with the cash earmarked for debt reduction and Sydney project funding. Ben Richards, portfolio manager at Seneca Financial Solutions, noted the deal finally pushed investors to “take its book value seriously.” Reuters
Shares of Infratil climbed after CDC Data Centres—49.7% owned by Infratil—landed a 555-megawatt contract with a U.S. investment-grade client. “It highlights Australasia’s opportunity to attract global computing capacity,” CEO Jason Boyes said. CDC, for its part, noted the win pushes its total contracted capacity past 1 gigawatt. nzx.com
The rally left some behind. JB Hi-Fi dropped as investors digested the company’s latest update: sales are up, but management flagged higher costs and supply issues. Group CEO Nick Wells called out “an increasingly uncertain retail environment,” highlighting rising component costs, limited stock, and stiffer competition in tech. Inside Retail Australia
The Australian dollar pushed higher, hovering at four-year peaks as traders followed a global risk-on wave. According to ABC market data, the currency advanced 0.7% to 72.34 U.S. cents. Brent crude slipped 1.4% to $108.39 a barrel, while iron ore climbed 1.7% to $110.95 a tonne just after 5:20 p.m. AEST.
Interest rates are still calling the shots. Belinda Allen, CBA’s Head of Australian Economics, noted the RBA’s statement backs the bank’s forecast for rates to remain unchanged through the rest of 2026. Still, she flagged that “a further rate hike cannot be ruled out” and emphasized “economic outcomes will dictate the path of policy.” CommBank
Westpac Chief Economist Luci Ellis sounded less convinced, saying more rate hikes this year still seem likely, despite the June meeting now shaping up as a close call. According to Ellis, short-term inflation pressures look higher than the RBA’s projections, with oil prices possibly holding above what futures are suggesting.
Wednesday’s rebound might not hold up for long. The RBA flagged that rising fuel costs and this year’s rate hikes are likely to drag on spending from both households and businesses; a prolonged conflict in the Middle East could deepen the impact. The divide in Australian equities persists: banks and miners showing strength, while consumer stocks, retailers, and names sensitive to energy prices remain under pressure.
