Australia shares fall as central bank retains key rate at 12-year peak
RBA holds rate at 4.35%
Financials fall 0.6%
Traders keenly watch U.S. election
Updates to close
By Rajasik Mukherjee
Nov 5 (Reuters) -Australian shares slipped on Tuesday, dragged down by financials, as its local central bank clung on to the 12-year high interest rates in a bid to tame core inflation.
The S&P/ASX 200 index .AXJO fell 0.4% to close at 8131.8. The benchmark had finished0.6% higher on Monday.
The Reserve Bank of Australia (RBA) kept interest rates steady, aligning with a Reuters' poll, even as it lagged its peers in starting its easing cycle.
The RBA reiterated that the policy will have to remain restrictive to slow down the core inflation to its target range, dousing all hopes of a rate cut this year.
Australia's Core inflation - a trimmed mean measure closely watched by the RBA - is expected to slow just a touch to 3.4% by year-end from 3.5% in the third quarter, still above the RBA's target band of 2-3%.
"Interest rate traders appear disappointed with today's decision and statements from the RBA. Market pricing now reflects reduced expectations of rate cuts in 2025," said Michael McCarthy, Chief Commercial Officer of Moomoo Australia.
Back on the bourse, financials .AXFJ led the decline with a 0.6% fall as it bore the brunt of profit taking.
"Major banks are trading near all-time highs and are subject to profit-taking as investors prepare for the key risk events over the next 48 hours," McCarthy added.
All "Big Four" banks traded in red, with top lender Commonwealth Bank of Australia CBA.AX shedding 0.4%.
Energy stocks .AXEJ lost 0.5% tracking global oil prices lower. O/R
Sector heavyweight Woodside Energy WDS.AX slipped 0.3%.
Miners .AXMM traded largely flat, with Rio Tinto RIO.AX falling 0.3%.
Investors are tuned into the hotly-contested U.S. election as opinion polls failed to suggest a clear winner between Republican Donald Trump and Democrat Kamala Harris.
New Zealand's benchmark S&P/NZX 50 index .NZ50 rose 0.5% to finish the session at 12658.3 points.
Reporting by Rajasik Mukherjee in Bengaluru; Editing by Sumana Nandy
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