ASX 200 rallies 1.2 per cent to its second best day close on record

The Australian sharemarket closed just off a record high on Thursday, as renewed optimism in the US-China relationship, spurred a rally in key stocks.

Australia’s market continues to recover from Monday’s sell-off as investors factor in a tempered Chinese response to US tariffs as well the likelihood of a rate cut in February.

The benchmark ASX200 index soared 103.80 points or 1.23 per cent to 8520.70 points, to close at its second highest point of all time.

The broader All Ordinaries rose 101.07 points or 1.17 per cent to close at 8785.10 points.

The Australian dollar fell slightly during trading and is at 62.62US cents.

Local markets are now up 3 per cent from their lows and the ‘risk on’ sentiment returns to markets as they start to price in a more tempered global trading environment as well as rate cuts in February.

It was a sea of green as the market closed in on a record high. Picture: NewsWire / Max Mason-Hubers

All sectors except energy rose with financials, consumer discretionary and property the standouts.

Much of the gains on Thursday’s markets were in the financial sector with all of the big four banks lifting the market higher.

Commonwealth Bank touched a record high in the afternoon, ahead of announcing its half yearly results on February 12, before resetting that high and closing at $162.64. NAB rose 2.5 per cent to $40.38, ANZ 2.3 per cent to $30.95 and Westpac 1.9 per cent to $34.00.

Moomoo market strategist Jessica Amir said contrary to popular belief, bank profits improve during a rate cutting cycle.

“In 2021 after the pandemic and rates were cut CBA bank net income hit a record high, so despite the average punter thinking banks make less money when rates are cut it’s quite the contrary,” she said.

“This is due to a flood of demand in housing lending means they earned a record amount of dollars, with the markets expecting the bank to get back to these records in 2026.”

After the brief 3.2 per cent pullback this week from record highs, buyers have returned to boost the ASX200 consumer discretionary sector, which soared 1.88 per cent on Thursday.

Adairs gained 3.41 per cent to $2.73, while Harvey Norman added 1.72 per cent to $5.31 and Premier Investments finished marginally in the green up 0.25 per cent to $24.31, after a pull back on the bell.

The market was led higher off the back of strong gains in the banking and consumer discretionary stocks. Picture: NewsWire / Max Mason-Hubers

Gold miners also had a strong day with Westgold Resources up 4.132 per cent to $2.52 and Vault Minerals climbing 3.70 per cent to $0.42.

Ms Amir said the US dollar continues to fall which is for the benefit of all commodities, although it is especially good for gold and silver prices.

“Gold closed at another record, as China and other central banks continue their buying of gold reserves,” she said.

“Adding to it is the lingering uncertainty with gold still being the key reserve asset on central bank balance sheets.

News Corp led the gains on the ASX on Thursday, after the media company, which owns The Australian, reported its second-quarter results that beat analyst estimates.

News Corp earnings jumped 20 per cent to $US478m, with shares rallying 5.76 per cent to $56.28.

Originally published as ASX 200 rallies 1.2 per cent to its second best day close on record