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Australian central bank raises rates amid persistent inflation

Rising oil prices amid the US-Iran conflict and elevated US bond yields put equities under pressure: Wall Street closed lower on Monday, and Asian markets were declining on Tuesday. The Reserve Bank of Australia raised interest rates on Tuesday, citing persistent inflation and higher energy costs. Later Tuesday, investors will turn to remarks from ECB President Christine Lagarde and US job openings and consumer confidence data.

  • Date
  • Auteur Amira Scherz, Junior Investment Writer
  • Temps de lecture 5 minutes

Reserve Bank of Australia
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Asian stocks fell on Tuesday as higher US bond yields and oil prices weighed on sentiment, with Japan’s Nikkei 225 down 1.6% and Hong Kong’s Hang Seng down 0.7% in early trading. The ten-year US Treasury yield was trading higher at about 5.27%, while Brent crude oil futures rose about 2% to USD 99.84 per barrel amid the conflict in the Middle East. Australia's leading share market index ASX 200 in Sydney traded 0.2% lower following the Reserve Bank of Australia's (RBA) interest rate decision. Gold rose 0.3% to around USD 4130 per ounce, while bitcoin slipped 0.4% to around USD 83,200.

RBA raises rates

The Reserve Bank of Australia unanimously raised its cash rate target to 4.6% from 4.35% on Tuesday. The board cited stronger-than-expected inflation, higher energy prices linked to the Middle East conflict and persistent domestic capacity pressures. It said further increases remained possible if needed to bring inflation back to target, despite signs that the economy is slowing.

US stocks fall as dollar strengthens

The Dow Jones lost 0.7%, the S&P 500 declined 0.8% and the Nasdaq-100 dropped 1.1%. Oil remained supported after US President Donald Trump rejected an Iranian proposal linking the reopening of the Strait of Hormuz to sanctions relief, although Middle Eastern crude exports recovered to nearly 80% of pre-war levels in September. Adding to the pressure, OpenAI’s pause in training its leading models weighed further on technology shares. Nvidia, meanwhile, launched an AI-agent safety platform with open-source components for partners including Microsoft, Cisco, Oracle and Intel. In currency markets, higher Treasury yields helped lift the US dollar to CHF 0.8319, its strongest level against the Swiss franc since May 2025.

Texas manufacturing sentiment eases

The Dallas Fed’s index of general business activity in Texas manufacturing fell to 9.8 points in September from 11.6 in August, according to figures released on Monday. The company outlook index dropped to 8.7 from 19.2, while the employment index rose to 15.1 from 8.0. Price pressures strengthened, with the raw materials index reaching 52.2, well above its long-run average of 28.0. The index of expected business activity declined to 20.8 from 37.2 but also stayed positive.

ECB Lagarde favours measured monetary policy response

ECB President Christine Lagarde said on Monday that a measured response remains appropriate despite euro-area inflation exceeding 3%. She blamed higher energy prices linked to the US-Iran conflict but said there was no sign yet of rising wages reinforcing inflation. Inflation could reach 4% by year-end, twice the ECB’s target. Investors are awaiting further remarks from Lagarde this afternoon.

Italy’s non-EU trade surplus narrows

Italy’s non-EU trade surplus fell to EUR 2 billion in August from EUR 6.99 billion previously, but exceeded the EUR 1.878 billion recorded a year earlier, data released on Monday showed. Exports fell 2.1% from July, mainly because that month included maritime vessel sales, while imports edged down 0.1%. Excluding those sales, exports rose 0.2%.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Swiss KOF Economic Barometer (09:00), European Central Bank President Christine Lagarde speaks (13:00), Canadian gross domestic product (14:30), Conference Board Consumer Confidence Index (16:00), US Job Openings and Labor Turnover Survey (16:00).

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Editor: Alessandro Fezzi
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