ASX closes near all-time high, led by energy stocks; CBA jumps above $180

The Australian sharemarket closed just a whisker away from an all-time high after a solid lead from Wall Street and softer-than-expected local GDP figures, which raised hopes of further rate cuts from the Reserve Bank.

The S&P/ASX200 climbed 75.10 points, or 0.9 per cent, to 8451.80 on Wednesday, just 14 points below its record close in mid-February.

All industry sectors, bar communication services and consumer staples, were in the green, led by gains in energy and consumer discretionary stocks, miners and banks. CBA shares climbed above $180 for the first time, taking the bank’s sharemarket value beyond $300 billion. The Australian dollar traded flat at US64.62¢ as of 4.46pm AEST.

Wall Street gained across the board, setting the scene for the local sharemarket.Credit: AP

The lifters

Following the GDP data, the big four banks increased their gains as expectations of further easing by the RBA boosted investor confidence. Commonwealth Bank, the nation’s largest lender, rallied 1.4 per cent to $181.10, another record, giving it a market value of $303 billion. The stock – which is the biggest on the ASX by market capitalisation – has surged 17.9 per cent this year, defying downgrades from analysts who have been seeing no more room for further gains.

Westpac gained 1.5 per cent. Its RAMS Home Loans business admitted to a range of breaches by franchisees and their staff after the Australian Securities and Investments Commission launched legal action alleging systemic misconduct, including the lodgement of false payslips. However, the bank said its existing provisions for the case were sufficient to meet the financial outcome of the proceedings. National Australia Bank gained 1.1 per cent and ANZ finished up 1 per cent.

Consumer discretionary companies also gained amid hopes that further interest rate cuts will leave people with more money to spend, with Bunnings and Officeworks owner Wesfarmers up 0.6 per cent, electronics retailer JB Hi-Fi rising 2.1 per cent and furniture seller Harvey Norman climbing 3 per cent.

The mining heavyweights were trading stronger, with iron ore giants BHP and Fortescue Metals up 1 per cent and 1.6 per cent, respectively.

Energy stocks rose once again as oil prices strengthened by more than 1 per cent overnight. Woodside Energy jumped 2.9 per cent and Santos rose 0.9 per cent.

The laggards

Mayne Pharma shares fell 5.3 per cent after the drugmaker said its US suitor Cosette Pharmaceuticals has sent a notice to terminate their takeover. Cosette has been claiming Mayne’s recent trading performance had triggered a material adverse change in their takeover deal, which Mayne disputes. Mayne told investors the US company had no lawful basis to nix the merger, and it would “reserve all of its rights” if Cosette doesn’t meet its obligations under the deal.

Qantas Airways shares dropped 1.6 per cent amid news its arch rival Virgin Australia will soon not only compete with it in the skies, but also on the trading floor.

Virgin on Wednesday kicked off its return to the Australian sharemarket after an absence of more than four years, with bankers offering shares in the airline to investors at $2.90 apiece for its much-anticipated re-listing on the ASX.

Private equity owner Bain Capital will sell about 30 per cent of the nation’s second-biggest airline, expecting to raise $685 million via the IPO, which would value Virgin at about $2.3 billion. The $2.90 price tag for the stock represents a multiple of seven times the airline’s expected earnings this financial year, making it cheaper than Qantas which trades at about 10 times expected earnings.

The lowdown

After the Trump turmoil of recent weeks, investors turned their attention to local news after a government report showed Australia’s economy opened 2025 on a softer-than-expected note as both lower public spending and weaker exports detracted from growth. Gross domestic product rose 0.2 per cent in the first quarter, slower than the predicted 0.4 per cent. The 1.3 per cent annual expansion compared with a forecast 1.5 per cent gain.

The news vindicated the RBA’s recent pivot to rate cuts, and triggered investor bets for more easing to come.

The central bank’s baseline scenario is for economic growth to pick up to 2.1 per cent by the end of the year, spurred by household spending as cash is freed up by lower borrowing costs. Last month, it cut the cash rate to 3.85 per cent, citing an uncertain global backdrop and indicating a willingness to “respond decisively” if the economy deteriorated.

The central bank now needs a quarterly growth rate of 0.7 per cent in the current three-month period to hit its forecast — a level not seen since mid-2022, according to Alex Joiner, chief economist at IFM Investors.

“This outcome adds to the case that it is appropriate for the RBA to ease policy settings further,” he said.

Lower interest rates make it cheaper for companies and consumers to borrow money and reduce households’ mortgage stress in the cost-of-living crisis, which is good news for company profits and share price.

A strong trading session on Wall Street overnight had already sent Wednesday’s session off to a good start. US stocks also pulled closer to their record as the wait continued for more updates on US President Donald Trump’s tariffs.

The S&P 500 rose 0.6 per cent, coming off a modest gain that added to its stellar May. It’s back within 2.8 per cent of its all-time high set earlier this year after falling roughly 20 per cent below two months ago. The Dow Jones added 214 points, or 0.5 per cent, and the Nasdaq composite climbed 0.8 per cent.

A report on Tuesday showed US employers were advertising more jobs at the end of April than expected, another signal the US economy remains resilient.

On the trade front, hopes are still high that Trump will reach deals with other countries on tariffs, particularly with China. The US side said Trump expected to speak with Chinese leader Xi Jinping this week.

with AP, Bloomberg

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