Aussie shares soar as jobless rise lifts rates cut hope

Welcome to your five-minute recap of the trading day.

The numbers

Rate cut hopes pushed the Australian sharemarket to a record high, despite a seesawing session on Wall Street, after US President Donald Trump admitted he had looked into the feasibility of firing Federal Reserve chair Jerome Powell.

Wall Street has had a rollercoaster session on Wednesday. Credit: Bloomberg

The ASX 200 finished 77.2 points, or 0.9 per cent, at 8639 points on Thursday, with all 11 sectors in the green and pushed higher by industrials, banks and real estate stocks.

Its closing level eclipsed Tuesday’s close for its highest finish ever, while its 0.9 per cent gain was its best in 3½ weeks.

The lifters

The best performers of the day were Afterpay owner Block, up 5.1 per cent, followed by Nuix (up 4.9 per cent) and Auckland International Airport, which gained 4.3 per cent.

The industrials, financial and real estate sectors were up 1.3 per cent or more.

The miners were in the green: Rio Tinto closed 0.5 per cent higher, Fortescue rose 0.3 per cent, and BHP finished flat. Gold giant Newmont added 1.6 per cent after losing more than 5 per cent on Wednesday.

The laggards

At the bottom of the index was retirement real estate company Lifestyle Communities, which shed 4 per cent. West African Resources fell 3.9 per cent and CAR Group declined 2.9 per cent after its chief executive, Cameron McIntyre, announced his departure following 18 years with the business and nine years at the helm.

Financial stocks advanced after suffering losses in the previous session. ANZ rose 1.1 per cent, Commonwealth Bank closed 1.8 per cent higher, Westpac gained 1.2 per cent, while NAB added 1.1 per cent.

Qantas finished 0.6 per cent higher. The airline announced it had received a court injunction to prevent hacked data from being accessed by the public, in a legal move designed to minimise the impact of the data breach.

The airline on Thursday obtained an interim injunction in the NSW Supreme Court to “prevent the stolen data from being accessed, viewed, released, used, transmitted or published by anyone, including by any third parties”.

“We want to do all we can to protect our customers’ personal information and believe this was an important next course of action,” the company said.

The lowdown

The local sharemarket has set another record after the unemployment rate rose to its highest level in nearly four years, increasing the odds of an interest rate cut.

Employment data released on Thursday showed unemployment rose to 4.3 per cent in June.

“The rise in the unemployment rate appeared to reflect that labour force growth [labour supply] outpaced employment growth [labour demand] in the month,” said HSBC Australia chief economist Paul Bloxham.

“While it’s hard to read too much into one monthly print, today’s data will strengthen the case for the RBA to cut [interest rates] at its next meeting [in] August.”

Betashares chief economist David Bassanese said the rise in unemployment could “suggest the economy is finally losing the ability to find jobs for a labour force still growing strongly at a rate of around 30,000 per month”.

The central bank will also be looking closely at the quarterly CPI data that will be released on July 30.

“If annual trimmed mean inflation is 2.7 per cent or less – as I expect – it’s a slam dunk that the RBA will cut rates next month,” Bassanese said.

The increased expectations for lower rates sent shares higher and the Australian dollar lower.

The Aussie fell to a 23-day low against its US counterpart, changing hands for US64.71¢, down from US65.25¢ at close of business on Wednesday.

Overnight, Trump sent the US stock market on a jagged round trip after saying he had “talked about the concept of firing” the head of the Federal Reserve, Jerome Powell. Such a move could help Wall Street get the lower interest rates it loves, but would also risk a weakened Fed unable to make the unpopular moves needed to keep inflation under control.

The S&P 500 rose 0.3 per cent after whipping through an earlier drop and subsequent recovery.

Fed chair Jerome Powell has been a frequent target of Donald Trump.Credit: Bloomberg

The Dow Jones gained 231 points, or 0.5 per cent, and the Nasdaq composite added 0.3 per cent to its record set the day before.

US stocks had been rising modestly in the morning, before news reports that Trump was likely to fire Powell quickly sent the S&P 500 down by 0.7 per cent.

When later asked directly if he was planning to fire Powell, Trump said: “I don’t rule out anything, but I think it’s highly unlikely.” That helped calm the market, and stocks erased their losses, though Trump added that he could still fire Powell if “he has to leave for fraud”. Trump has been criticising a $US2.5 billion ($3.8 billion) renovation of the Fed’s headquarters in Washington.

Trump’s main problem with Powell has been that the Fed has not cut interest rates this year – a move that would have made it easier for US households and businesses to get loans to buy houses, build factories and otherwise boost the economy. Lower interest rates could also help the US government, which is set to borrow and add a lot more to its debt after approving a wide range of tax cuts.

Powell, meanwhile, has been insisting that he wants to wait for more data about how Trump’s stiff proposed tariffs will affect the economy and inflation before the Fed makes its next move.

The Fed has two main jobs: keeping the job market strong while keeping inflation under control. Lowering interest rates would help boost the economy, but would also give inflation more fuel when tariffs may be set to push prices for US households higher.

A report on Wednesday said inflation at the wholesale level slowed to 2.3 per cent last month, which was better than economists expected. It’s an encouraging signal, but it came a day after another report suggested that Trump’s tariffs are pushing up the prices US shoppers are paying for toys, apparel and other imported products.

Trump’s tariffs are making their weight felt across financial markets. ASML, the world’s leading supplier of chip-making gear, warned that it can’t guarantee growth next year after delivering an expected 15 per cent growth in sales for 2025.

Conditions still look strong for ASML’s customers in the AI business, but CEO Christophe Fouquet said in a video that “the level of uncertainty is increasing, mostly due to macroeconomic and geopolitical considerations. And that includes, of course, tariffs.”

Shares that trade in the United States of ASML, which is based in the Netherlands, fell 8.3 per cent.

Stocks of several US companies reporting stronger profits in the latest quarter than analysts expected helped offset that.

Johnson & Johnson jumped 6.2 per cent after the drug and medical device giant beat analysts’ sales and profit targets and raised its full-year forecasts for both. CEO Joaquin Duato said it expects “game-changing approvals and submissions” in the second half of 2025 on an array of products, including for lung and bladder cancer.

GrabAGun, an online retailer of firearms and ammunition, swung sharply after combining with Colombier Acquisition Corp II and taking its spot on the stock market under the ticker symbol “PEW”. Donald Trump Jr, the son of President Trump, is joining the company’s board.

The stock quickly went from an early gain of 19 per cent to a drop of 31 per cent before finishing with a loss of 23.9 per cent, with several halts in trading along the way.

In the bond market, the yield on the 10-year US Treasury fell to 4.45 per cent from 4.5 per cent late Tuesday. It had been as low as 4.44 per cent earlier in the day, but it climbed following reports Trump was likely to fire Powell.

A new Fed chair friendlier to Trump could mean lower short-term interest rates but also the opposite effect on longer-term yields. That’s because a less independent Fed would raise worries that it may also let inflation run higher in the future by being slow to raise interest rates.

With AAP, AP

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