The Australian share market has finished higher, but a stronger rally faded after the release of hawkish Reserve Bank minutes indicating another interest rate hike this year is still possible.
The benchmark S&P/ASX200 index closed Tuesday up 29.6 points, or 0.42 per cent, to 7,056.1, while the broader All Ordinaries gained 29.8 points, or 0.41 per cent, to 7,244.4.
The ASX200 had been up as much 1.05 per cent by late morning amid efforts by the international community to de-escalate the situation in the Middle East, but gave up some of those gains after the release of minutes from the RBA's last meeting indicating that board members were open to another rate hike next month.
The board believes most households and businesses are managing to adjust to higher interest rates, the minutes showed, and board members are concerned about the upside risks of inflation.
"The board has a low tolerance for a slower return of inflation to target than currently expected," the minutes said, striking more hawkish stance than previous recent RBA communications.
ANZ economist Adam Boyton said the bank's view was that a rate hike next month would require an "uncomfortably high" consumer price index print next week, but the risk of RBA action appeared to be rising.
September labour force data to be released by the Australian Bureau of Statistics on Thursday could also sway the RBA, according to both Mr Boyton and J.P. Morgan economist Ben Jarman.
Seven of the ASX's 11 sectors finished higher on Tuesday, with tech the biggest gainer, rising 1.3 per cent as Xero gained 2.0 per cent.
The Big Four banks all finished higher, with Westpac, ANZ and NAB all finishing up 0.8 per cent, to $21.48, $25.76 and $29.37, respectively. CBA added 0.5 per cent to $101.20.
The heavyweight mining sector advanced 0.7 per cent, with BHP up 0.9 per cetn to $45.57, Fortescue climbing 1.4 per cent to $21.83 and Rio Tinto adding 1.2 per cent to $117.11 as the company reaffirmed its full-year iron ore production guidance.
"We delivered another quarter of progress," CEO Jakob Stausholm said of its third-quarter production results.
Bapcor Limited was the biggest loser in the ASX200, falling 11.5 per cent to a four-month low of $5.91 as the vehicle accessory supplier's chief executive announced at its annual meeting that revenue growth had slowed to low single digits this financial year.
"We are not immune from the shorter-term macroeconomic headwinds facing many organisations", which have been compounded by short-term margin pressures from cost inflation and increasing payroll taxes, CEO Noel Meehan said.
The Australian dollar was buying 63.49 US cents, from 63.29 US cents at Monday's ASX close.
ON THE ASX:
* The S&P/ASX200 index finished Tuesday up 29.6 points, or 0.42 per cent, at 7,056.1
* The All Ordinaries gained 29.8 points, or 0.41 per cent, to 7,244.4
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 63.49 US cents, from 63.29 US cents at Monday's ASX close
* 94.97 Japanese yen, from 94.63 yen
* 60.21 Euro cents, from 60.09 Euro cents
* 52.07 British pence, from 52.01 pence
* 107.63 NZ cents, from 106.88 NZ cents
