SYDNEY, March 12, 2026, 20:08 (AEDT)
Australian stocks took a sharp dive Thursday, the S&P/ASX 200 sliding 1.3% to close at 8,629.00. Oil’s sprint past $100 a barrel—fueled by attacks on Middle East tankers—clipped a brief two-day rally and triggered a pullback in both banks and miners. Energy shares bucked the drop, finishing stronger than the rest.
Traders are shifting their bets on next week’s Reserve Bank of Australia call, following February’s move to lift the cash rate to 3.85%. The RBA meets again March 16–17. The benchmark is already off over 6% for March, pacing for the steepest monthly drop since September 2022.
Interest-rate swaps, the go-to gauge for investors sizing up policy moves, now price in about a 75% chance of another quarter-point hike—well above the 20% odds before the conflict erupted. Commonwealth Bank on Thursday said it’s penciling in hikes for both March and May, which would bring the cash rate up to 4.35%. Westpac changed tack this week, too, also projecting back-to-back increases at those meetings.
“The debate at the March meeting will be a close one,” said Belinda Allen, CBA’s head of Australian economics. CBA maintains its expectation of RBA action, pointing to inflation running above target and an economy tracking above trend. commbank.com.au
Financial stocks slipped 1.5%, with miners off by 1.7%. The blue-chip gauge—tracking the major iron ore producers and the big four banks—shed 1.2%. Healthcare, tech, and real estate names were hit even harder, losing anywhere from 1.5% up to 3.5%. Energy names broke the trend: Yancoal Australia shot up 10.5%, hitting levels not seen in nearly nine years. Whitehaven Coal wasn’t far behind, climbing 6.7%.
Equities could remain stuck in “risk-off mode,” with investors shying away from stocks unless something improves regarding Iran or the Strait of Hormuz, said Tim Waterer, chief market analyst at KCM Trade. He also flagged that tighter rates might slow growth. The Economic Times
Sydney wasn’t the only one under pressure. MSCI’s Asia-Pacific index ex-Japan shed 1.5%, with Japan’s Nikkei off 1.4% and Hong Kong’s Hang Seng losing 1.2%. The Australian dollar eased 0.4% to $0.7122, despite firmer local rate expectations—traders still sought out safer ground.
Fresh data at home didn’t help much. The Commonwealth Bank Household Spending Insights index slipped 0.5% in February, snapping a 17-month run — its first decline since September 2024. Annual growth eased back to 4.9%, marking the slowest pace since August 2025. “Spending has been remarkably resilient over the past year,” Allen noted, though the drop hints that households might finally be tightening up. commbank.com.au
Oil remains the wild card here. The International Energy Agency signed off on an unprecedented 400 million barrel release from reserves, but analysts warn that’s just a stopgap if Hormuz shipping remains offline. ING argued crude prices won’t see lasting drops unless tankers actually resume passing through the strait.
Traders have their eyes on March 17—RBA decision day. The market bounced back 1.1% Tuesday, then added another 0.6% Wednesday, but Thursday reversed the mood fast. Jitters over crude and shifting rate bets took over.
