ASX rallies to record on rate cut bets; CBA pace gains
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Banks, rate-sensitive stocks lift ASX to record close
The Australian sharemarket reset its record high for the second time this week after an unexpected tick up in the unemployment rate to 4.3 per cent bolstered bets for an interest rate cut from the Reserve Bank of Australia next month.
The S&P/ASX 200 Index jumped 77.2 points, or by 0.9 per cent, to a fresh peak 8639, rebounding from Wednesday’s sharpest one-day loss since May and trumping Tuesday’s record of 8630.30. The All Ordinaries Index climbed 0.8 per cent.
All 11 sectors on the ASX climbed, led by the rate-sensitive property stocks and the major lenders as markets ramped up bets for a quarter-point rate cut at the RBA’s August 12 meeting.
Investors rotating
Bond traders are pricing in a 94 per cent chance of further easing, up from 90 per cent before the jobs data landed. That data was expected to show unemployment holding steady at 4.1 per cent.
Bond markets quickly responded, with the three-year government bond yield falling 5 basis points to 3.45 per cent. The Australian dollar also weakened, slipping 0.7 per cent to US64.83¢ by the close.
“Investors appear to be welcoming the growing likelihood of monetary policy easing,” said AvaTrade chief market analyst Kate Leaman. “Broad-based sector gains – particularly in tech, real estate, and financials, suggest markets are already rotating toward rate-sensitive areas.”
Gains were paced by the blue-chip banks, which were the market laggards on Wednesday. Index heavyweight Commonwealth Bank rallied 1.8 per cent to $180.80, while Westpac, ANZ and National Australia Bank all climbed more than 1 per cent.
Property stocks also bounced, with Mirvac rallying 3.2 per cent to $2.24 and Scentre Group and Charter Hall by 1.9 per cent. Technology stocks were bolstered by Afterpay-owner Block, which jumped 5.1 per cent to $106.40, and Xero climbed 1.7 per cent to $179.13.
Gains were more subdued in the mining sector despite iron ore climbing to a two-month high of $US100.90 per tonne. Rio Tinto rose 0.5 per cent to $111.10 and Fortescue Metals added 0.3 per cent to $16.91.
Lithium producers fared better, with Pilbara Minerals climbing 1.9 per cent to $1.57, Mineral Resources adding 1.3 per cent to $27.75 and IGO 2.1 per cent to $4.83.
Stocks in focus
In company news, Car Group was among the laggards, falling 2.9 per cent to $36.35 after announcing chief financial officer William Elliott will succeed long-time chief executive Cameron McIntyre next month. The company also flagged net income for the fiscal year of $273 to $277 million.
Qantas rose 0.6 per cent to $11.04 after Citi upgraded the airline to “buy” with a target price of $12.20. The airline secured a Supreme Court injunction to stop stolen data being published by anyone, just weeks after cybercriminals accessed its systems and stole 5.7 million customers’ information.
And dual-listed aluminium producer Alcoa advanced 1.7 per cent to $44.54 despite telling investors it absorbed about $US115 million ($176.6 million) in tariff costs during the second quarter on Canadian aluminium imports to the US, following policy changes enacted by US President Donald Trump.
That’s a wrap on today’s news. Join us again soon for more live markets news.
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