Bourse resets record as big four banks rally on bolstered rate cut bets

Buoyed by the financials sectors, the Australian sharemarket raced ahead to close out the week at an all-time high.

Buoyed by the big four banks, which soared to record or multi-year highs, Australian shares reset their records to close the week as traders bolstered their bets of rate cuts through the second half of 2024.

The benchmark S&P/ASX200 rallied to an all time intraday high of 7853.1 late in the session before later setting to 7847 — up 1.1 per cent at the closing bell.

Meanwhile, the broader All Ordinaries also reset its record, closing up one per cent to 8107.5.

The Australian dollar also moved higher against the greenback to buy US66.31c.

KCM Trade chief market analyst Tim Waterer said equities had been supported by a risk-on sentiment as investors were beginning to see a “light at the end of the tunnel” regarding looser monetary conditions this year.

“It’s been an encouraging week for investors regarding the interest rate outlook … obviously, financials being a very sensitive sector that will be the main beneficiary of the positive conditions on the market today,” Mr Waterer said.

Australia's four big banks — Commonwealth, Westpac, NAB, ANZ — all reached record or multi-year highs. Picture: NCA NewsWire

However, an upside surprise on fresh US jobs numbers scheduled for release later tonight could put a dampener on sentiment, he added.

“If we did see a strong result tonight, that could cast some doubt as to whether the Fed could cut rates in June.”

Bar industrials, all 11 industry sectors finished in the green, led by financials which rallied two per cent after sector-heavyweight Commonwealth Bank surged 1.8 per cent to $121.45 — a fresh record high.

Westpac surged 2.6 per cent to $27.70 — a level not reached since November 2019 — while ANZ added 1.7 per cent to $29.81, which was its highest since August 2018, and NAB rose 2.3 per cent to $35.11 — a nine-year high.

The rally in financial stocks came as investor optimism grew over the prospect that the US Federal Reserve would begin slashing interest rates later this year.

In testimony to US lawmakers, Fed chair Jerome Power said the central bank was “not far” from being able to ease interest rates as it awaited greater confidence that inflation was returning to its two per cent target.

“When we do get that confidence, and we’re not far from it, it will be appropriate to dial back (interest rates),” he told the Senate’s powerful Banking Committee.

Shares on Wall Street rallied on the news, with Nasdaq-composite and the S&P500 index adding 1.5 per cent and one per cent, respectively, to both reach record highs.

The US benchmark, the Dow Jones index added 0.3 per cent.

Federal Reserve chairman Jerome Powell told US senators that the central bank was “not far” from being able to ease monetary conditions. Picture: AFP

Across the Atlantic, European Central Bank president Christine Lagarde indicated it could leapfrog the Fed and cut rates from June after it unveiled fresh projections showing inflation could hit the ECB’s two per cent target by 2025.

A sluggish December quarter GDP reading had also buoyed investors’ hopes of RBA rate cuts, Betashares chief economist David Bassanese said.

“With GDP numbers this week confirming a soft economic outlook, rate cuts seem firmly on the horizon,” Mr Bassanese said.

“Along with strength on Wall Street, we expect the records to keep tumbling for Australian shares with our year-end target of 8000 points likely to be met well ahead of schedule.”

In corporate news, Virgin Money vaulted 32.9 per cent to $4.08 after, their biggest intraday gain since the stock was listed in 2016, after it received an all-cash takeover bid from the UK’s Nationwide Building Society worth £2.9bn ($AU5.6bn).

Shares in Ramelius Resources added one per cent to $1.56 as it confirmed it was undertaking due diligence to acquire Canadian-listed gold miner Karora Resources in a deal worth a reported $700m to $1bn.

GQG Partners shed 1.8 per cent to $2.20 after it was revealed asset manager Pacific Current Group had sold a four per cent stake in the investment fund worth $257.3mvia a block trade.