A rally in the big banks led the Australian sharemarket higher on Wednesday, helped by this week’s Reserve Bank rate cut and expectations of more policy easing.

The S&P/ASX 200 Index rose 0.5 per cent, or by 43.5 points, to 8386.8 at the close, just 2 per cent shy of its record high in February. Nine of the 11 sectors were in the green, with energy and healthcare stocks leading gains. The All Ordinaries rose 0.5 per cent.

Bond yields fell and equities rallied on Tuesday after the RBA cut rates to 3.85 per cent and governor Michele Bullock revealed that a 50 basis point cut had been discussed at the board meeting.

The governor’s dovish tone prompted Commonwealth Bank to bring forward its expectations for future rate cuts to August and September. It said the RBA’s shift in tone on inflation was the “catalyst”.

‘Quicker’ cuts

“The risk now lies with additional and quicker easing, and July cannot be ruled out,” CBA senior economist Belinda Allen said. “If the global situation deteriorates, there is the risk the RBA might have to take the cash rate into slightly stimulatory territory.”

Banks guided the broad rally in Australian shares on Wednesday, with index bellwether Commonwealth Bank touching a record in early trading. The stock was up 1.5 per cent to $174.98 at the close of trade. National Australia Bank added 1.2 per cent to $37.64 and Westpac edged up 0.2 per cent amid news it was preparing to shed more than 1500 employees.

Utilities and healthcare stocks also advanced, with power companies Origin Energy up 1 per cent to $11.14 and Contact Energy 3.4 per cent to $8.57. Among the healthcare names, ResMed jumped 4 per cent to $38.65 and Fisher & Paykel 3.1 per cent to $33.84.

Energy stocks tracked a rally in oil prices. Brent crude pushed above $US66 a barrel on a report that Israel was preparing for a strike on Iranian nuclear facilities. Woodside and Santos advanced more than 1 per cent to close at $21.75 and $6.45, respectively.

On Wall Street, investors took profits after a strong run for the S&P 500 that pushed it into bull market territory this week. The gauge closed down 0.4 per cent. Bitcoin’s rally also gathered steam, taking the cryptocurrency to a four-month high of $US107,430.

Stocks on the move

In corporate news, James Hardie slumped 6.2 per cent to $36.11 after warning that the US renovations market was weaker than expected as it pushes on with a controversial $14 billion buyout of Azek.

Mayne Pharma crashed 30 per cent to $4.55 after US pharmaceutical giant Cosette warned there had been a material adverse change in the company’s trading conditions, putting its $672 million takeover bid for the drug company in doubt.

Silver miner Adriatic Metals shot up 25.3 per cent to $4.71 after granting due diligence to Dundee Precious Metals, confirming media reports that it was in takeover talks for the Canadian gold miner.

Nufarm plunged 30.1 per cent to $2.81 after the global farm chemical supplier downgraded its earnings guidance. Nufarm reported lower first-half profit, driven by weakness in fish oil pricing and higher costs.

And Catapult jumped 13.7 per cent to $4.89 after the tech company reporting a 19 per cent increase in revenue to $US116.5 million ($181.4 million) for the full year.