Aussie shares slip as US tech sell-off and an expected RBA rate rise weigh on markets

Australian shares fell after a wave of selling in US technology stocks spread to local markets and as investors braced for an expected Reserve Bank interest rate rise.

The sell-off among US technology giants triggered losses in Australia’s growth and technology sectors, with momentum traders and international flows amplifying downside moves.

Market attention has shifted to the forthcoming RBA decision, which is widely expected to signal a further increase in the cash rate, and that uncertainty has reduced risk appetite across the ASX.

Rate-sensitive sectors saw the sharpest reaction. Real estate investment trusts and long-duration growth stocks experienced the most pronounced falls as investors re-priced future earnings in a higher-rate environment.

Financial stocks recorded mixed activity. Higher official interest rates can lift banks’ net interest margins over time, but the prospect of weaker loan demand and the shorter-term uncertainty around lending conditions put a brake on sector gains.

Households are likely to feel the impact through higher mortgage repayments, while some savers may see incremental increases to term deposit and savings rates, reflecting the pass-through of policy tightening.

Traders said the combination of international technology weakness and local policy risk pushed volatility higher, encouraging repositioning away from cyclical and high-growth exposures into more defensive holdings.

Liquidity in some mid and small caps thinned as investors sought to limit downside risk ahead of official comments from the RBA and any fresh signals from the US technology industry.

Market participants will be watching the RBA statement and subsequent commentary from its governor for guidance on the timing and scale of further rate moves, as well as any economic data that could alter expectations.

In the near term, heightened sensitivity to central bank communications and overseas tech sector developments is likely to keep trading activity and price swings elevated, with investors reassessing portfolio risk and duration exposure.