Rate Hike Bets Weigh on Australian Stocks Despite Strong Growth Report

Australian stocks took a hit on the day despite a stronger-than-expected second-quarter growth report. The Reserve Bank of Australia (RBA) is still seen as likely to raise interest rates later this month, with markets pricing in a close to 60% chance. This has kept investors cautious, particularly when it comes to rate-sensitive sectors.

The economy's resilience has actually given the RBA more room to keep inflation under control by tightening policy. As a result, traders are keeping a close eye on interest rates and their impact on the market. The S&P/ASX 200 fell 1.1%, while ASX-listed real estate stocks dropped 1.3%.

Miners also suffered as commodity prices softened, showing that the index can be pulled down by both global demand worries and domestic rate expectations at once. Listed property is particularly vulnerable to higher interest rates, which can push up 'cap rates', the yield investors demand from a property, and lower property valuations.