Australian shares advanced on Thursday to book their third day of gains in four after retreating on concern that interest rates would stay higher for longer.

The benchmark S&P/ASX 200 added 0.2 per cent, or 17 points to 7587 points, recouping some of the previous session’s 1.2 per cent sell-off.

Overnight, the US Federal Reserve held cash rates between 5.25 and 5.5 per cent and chairman Jerome Powell said another interest rate increase in the world’s largest economy was unlikely.

Easing rate fears

“The tone of this Fed meeting wasn’t as hawkish as markets feared,” said ANZ Bank. “The Fed is confident that policy is restrictive, giving the impression that it’s a matter of when, not if, rate cuts get underway.”

Interest rate futures traders now expect the Fed to cut rates at least once by the end of the year.

National Australia Bank led financials higher, adding 1.5 per cent to $34.28 after the lender beat analysts’ forecasts to book a cash profit of $3.55 billion for the six months to March 31.

The result boosted the other big banks, with Commonwealth Bank advancing 1 per cent to $115 per share.

“NAB’s result looks a bit better than expected, NIM [net interest profit margin] is marginally better, a few seasonal factors benefited its markets business and the whole sector is getting a bit of a bid today on that,” said Jason Kururangi, a portfolio manager at Milford Asset Management.

The interest rate sensitive tech sector was the best performer on the ASX, rising 1 per cent as enterprise software group WiseTech jumped 2.7 per cent to $91.21.

Stocks on the move

In corporate news, supermarket giant Woolworths sank 4.2 per cent after its half-year profit missed expectations, and it flagged rising costs. The company posted a 2.8 per cent lift in March quarter sales to $16.8 billion and said total food sales lifted 1.5 per cent on the prior corresponding quarter.

“Woolworths looks like a bit of a downgrade and the big issue is incremental supply chain costs rising,” Mr Kururangi said. “The sales environment is holding up ok, but we’re seeing a bit of deflation coming through in terms of food prices.”

The retailer said average food prices were largely flat in the March quarter, versus the prior year.

Autobarn owner Bapcor plunged 23.9 per cent to $4.40 after it downgraded its profit guidance and blamed consumers’ reluctance to spend on their cars as living costs rise.

And takeover target Namoi Cotton jumped 12.5 per cent to 72¢ after Singapore-listed Olam Group said it was willing to pay up to 70¢ a share for the company, raising the stakes in a bidding war with French agribusiness giant Louis Dreyfus.

In currency markets, the Australian dollar recouped some steep losses this week, rising 0.5 per cent to US65.5¢ at the closing bell. Bitcoin extended a week-long slide to lose another 4.5 per cent to fetch just $US57,430.