Australian shares end higher on mining boost; RBA decision in focus

Australian shares closed higher on Monday as heavyweight mining stocks rallied on hopes of an easing in China's COVID-19 curbs, with a likely quarter-point hike by the domestic central bank later in the week keeping investors cautious.

The S&P/ASX 200 index XJO ended 0.3% higher at 7,325.60 points.

The Reserve Bank of Australia (RBA) will go for another modest 25 basis-point rate hike on Tuesday, taking the key lending rate to 3.10% — its third quarter-point hike in a row after a succession of half-point moves, a Reuters poll showed.

Damian Rooney, director of equity sales in Argonaut Private Equity, agreed with the poll over the quantum of the hike, and said the dovish tone struck by the U.S. Federal Reserve is good news for equities going into December.

Aiding the sentiment further, China — Australia's top trading partner — announced steps to ease stringent COVID-19 lockdowns, boosting global growth and commodity demand outlook and resulting in a surge in base metals and gold prices.

Miners were the top boosts to the benchmark, with the sub-index XXMM up 1.6%. Iron ore giants Rio Tinto RIO, BHP Group BHP and Fortescue Metals FMG were up between 2.7% and 8%.

The energy sector XEJ surged 1.5% as oil prices climbed overnight. Sector majors Woodside Energy WDS and Santos Ltd STO added 2% and 2.7%, respectively.

Battery minerals producer IGO Ltd IGO declined as much as 5% after it suspended production at its Nova nickel operation in Western Australia for around four weeks after a fire damaged its power station over the weekend.

Financials XFJ declined slightly, with all of the "Big Four" banks seeing a decline. National Australia Bank NAB and Australia and New Zealand Banking Group ANZ lost 0.4% and 0.3%, respectively.

In New Zealand, benchmark S&P/NZX 50 index NZ50G rose 0.3% to 11,677.75 points, hitting its highest since Sept. 15.