The benchmark S&P/ASX200 index was up as much as 0.4 per cent in the first 10 minutes of trade on Wednesday but had been drifting lower since.
At noon AEST it was basically flat, up 2.9 points at 7,132.5. The broader All Ordinaries was up 3.8 points at 7,319.9.
Before markets opened Reserve Bank of Australia governor Philip Lowe told a Morgan Stanley business summit that “some further tightening of monetary policy may be required” following Tuesday’s rate hike, which was more or less a surprise.
“Markets are now digesting a hawkish stance from the RBA that investors weren’t anticipating this year, and the door is firmly propped open for more hikes,” said eToro analyst Josh Gilbert in an email.
“The biggest worry for investors is uncertainty.”
Also on Wednesday morning, the Australian Bureau of Statistics reported that gross domestic product climbed 0.2 per cent in the March quarter, compared to expectations of a 0.3 per cent rise.
Dwyfor Evans, head of APAC macro strategy at State Street Global Markets, called it a “slightly weaker” GDP readout that reflected the “twin headwinds of rising inflation and higher interest rates”.
“Weaker exports during the quarter was also a contributory factor – and speaks of a muted China reopening impact on the Australian economy,” he said.
The energy sector was the biggest mover at midday, falling 1.0 per cent as oil prices dipped on a buildup of inventory.
Woodside was down 0.8 per cent, Santos fell 1.0 per cent and Beach had dropped 6.7 per cent as Australia’s third-largest oil and gas producer announced it was abandoning its Trigg 1 gas exploration well in WA after poor test results.
All the Big Four banks were lower, with NAB and Westpac down 1.1 per cent, CBA falling 0.6 per cent and ANZ dipping 0.3 per cent.
In the heavyweight mining sector, BHP and Rio Tinto were both up 0.5 per cent while Fortescue Metals had edged 0.2 per cent higher.
Realestate.com.au owner REA Group was down 1.2 per cent and Domain Holdings had dropped 1.3 per cent as the higher rates weighed on the prospects of the residential property market.
Stockland was down 1.6 per cent, Lendlease had fallen 1.7 per cent and Charter Hall Group was 1.8 per cent lower.
PolyNovo was up 11 per cent to $1.615 as the biotech company, which makes a “dermal scaffold” that aids in the treatment of wounds and burns, reported its first-ever $A7m sales month.
“There is a lot to like about our growth, but particularly our rate of growth,” said chair David Williams.
The Australian dollar was buying 66.71 US cents, from 66.65 US cents at Tuesday’s ASX close.