Australian share market surges after US Federal Reserve signals rate cuts ahead

The Aussie share market finished sharply higher on Thursday after the US Federal Reserve kept rates on hold and signalled cuts in the months ahead.

The Australian share market soared to its highest level since the start of August on Thursday after the US Federal Reserve kept rates on hold and flagged rate cuts would commence in 2024.

At the closing bell, the S & P/ASX200 had climbed 1.7 per cent, or 120.1 points, to 7,377.9 with all thirteen industry sectors finished in the green. Meanwhile, the broader All Ordinaries finished even stronger, adding 1.8 per cent to 7,599.4.

The Australian dollar was sharply higher to buy US67.19c.

Overnight, Wall Street soared as traders raised their bets of rate cuts by the Fed in the new year. The Dow Jones, S & P/500 and the NASDAQ all added 1.4 per cent.

Market analyst at eToro, Josh Gordon said markets were pricing in a 60 per cent chance of rate cuts commencing in March with Fed officials seeing 75 basis points of cuts in 2024.

“The market has taken it and run with it. What we have from [Fed Reserve governor] Jerome Powell overnight was that the Fed can navigate a soft landing and we are going to see rate cuts next year as well,” Mr Gordon said.

Markets are now pricing that the US Federal Reserve will commence rate cuts in March 2024. Picture: AFP / Brendan Smialowski

Fresh jobs data, released on Thursday morning, was also well received by markets, Mr Gordon said, with the RBA’s attempt to slow economic growth working as intended

“We’re coming away from near-record lows in unemployment, we are starting to see a little bit of easing, we’re seeing job ads rise … that is basically going to mean that the RBA is finished with hiking rates,” he said.

Back on the benchmark, interest rate sensitive real estate stocks were the strongest performers vaulting 4 per cent. Tech and materials stocks also performed well, adding 2.9 per cent and 2.4 per cent.

Sector heavyweights Charter Hall vaulted 11.8 per cent to $12.34, Dexus added 5.7 per cent to $7.94 and Lendlease jumped 5.3 per cent to $7.36.

Gold miners rose as prices for the precious metal rebounded past $US2000 an ounce. Northern Star Resources vaulted 8.1 per cent to $13.18, Evolution Mining added 3.4 per cent to $3.70 and Regis Resources climbed 7.4 per cent to $2.04.

Meanwhile, insurance firms, which fare well when interest rates are higher, slumped. QBE lost 2.6 per cent to $14.07, Suncorp fell 1.6 per cent to $13.61, and IAG shed 1.9 per cent to $5.60.

Shares in Cobram Estate soared after the olive oil producer revealed high production output. Picture: Supplied.

In company news, olive oil producer Cobram Estate jumped 6.6 per cent to $1.61, its highest in more than a year. The firm reported production of 3.2 million litres of olive oil from its Californian harvest in the 2022-23 financial year, up 89 per cent from the year prior.

Viva Energy rose 6.1 per cent to $3.32 after the ACCC said it would not oppose the petrol retailer’s bid to acquire Peregrine Corporation’s OTR Group.

Glass bottle maker and aluminium can manufacturer Orora sank 3 per cent to $2.60. Having recently acquired French bottle maker Saverglass from US private equity firm The Carlyle Group, the company flagged headwinds which could hit the new part of the business.

Genesis Minerals climbed 5.1 per cent to $1.75 after the gold miner announced it would acquire the Bruno-Lewis and Raeside sites from Kin Mining.