Australian shares drop despite RBA rate reprieve

The broader All Ordinaries fell 66.3 points, or 0.9 per cent, to 7,269.8.

The central bank's decision to leave rates on hold for December came as no surprise to investors, who grew increasingly bullish about the prospect of another pause in February following governor Michele Bullock's commentary.

The rates market is pricing in a 10 per cent chance of a hike at the first board meeting of 2024, down from 35 per cent before the RBA's "dovish hold", IG markets analyst Tony Sycamore said.

The Australian dollar tumbled after the announcement to buy 65.82 US cents, from 66.56 US cents at Monday's ASX close.