BENGALURU: Australian shares closed marginally higher on Monday, lifted by energy and healthcare stocks, while investors awaited U.S Federal Reserve and Australian central bank’s rate hike decisions scheduled this week.

The S&P/ASX 200 index ended 0.4% higher at 7,334.60-points after closing up 0.2% on Friday. The benchmark marked its best day since April 14. The US Federal Reserve is scheduled to announce its rate decision on Wednesday, with the market pricing in around an 85% chance of a hike by 25 basis points to 5.00%-5.25%. Meanwhile, the Reserve Bank of Australia (RBA) is set to meet on Tuesday, with the larger expectation of RBA keeping the rate unchanged at 3.6% for a second consecutive meeting, according to a Reuters poll of economists.

Although inflation in Australia eased from 7.8% to 7% last quarter, it was still well above the RBA’s target range of 2%-3%, fanning concerns that a quarter-point rate hike can still be expected.

However, Henry Jennings, senior analyst at Marcustoday Financial Newsletter said that with the past 10 hikes by RBA, we have “reached a peak of the interest rate cycle” where we are seeing inflation starting to ease. Meanwhile, Australia’s top trading partner China saw manufacturing activity unexpectedly shrink in April, official data showed on Sunday.

“China’s recovery is somewhat sporadic right now and has been a little bit inconsistent. This is surly holding the resource stocks back at the moment”, Jennings added Energy stocks rose 1.1%, adding the most to the local bourse. Financials added 0.8%, with big four banks posting gains. Healthcare and real estate stocks climbed 1% and 0.6% respectively. New Zealand’s benchmark S&P/NZX 50 index fell 0.1% to finish the session at 12,002.97 points.