Local stocks hit 12-year high as chances of June RBA cut firm

The ASX200 has crashed through 6500 points for the first time since 2007 as odds of a rate cut firmed.

Market trading boards at the ASX. Picture: AAP

The local sharemarket surged to a fresh 12-year high on Tuesday, rounding out its fifth straight day of gains.

At the close of trade, the ASX benchmark S&P/ASX200 had risen 24.001 points, or 0.37 per cent to 6500.102 points. The broader All Ordinaries index had gained 19.698 points, or 0.3 per cent, to 6584.398 points.

After a negative start, the local market turned positive in afternoon trade on increased likelihood of a near-term rate cut.

The gains came after the ASX 200 surged to an 11-year high on Monday following the Coalition’s victory at the federal election on the weekend.

The market has risen 15 per cent for the year so far in what has been the best start to the year since 1991.

“It’s been quite a volatile day, a lot of swings and roundabouts and there were good reasons for that.

“The market followed the US and European lead in early trading and the index tanked but it’s pretty clear there’s ongoing support for the banks and that’s where the rally back into positive territory started,” said CMC Markets chief market strategist Michael McCarthy.

“For the second day in a row, the banks are top performers … the adding to those extraordinary gains yesterday suggests the election result was still at play in our market.

It followed the release of minutes from the Reserve Bank’s May meeting, which appeared to set the scene for interest rate cuts next month.

The banks extended their gains from Monday, boosted by a proposal by the Australian Prudential Regulation Authority to loosen regulations on responsible lending laws.

Westpac lifted 2.7 per cent to $28.50 while ANZ rose 2.1 per cent to $28.43. Commonwealth Bank put on 2 per cent to $78.97 while NAB added 1.5 per cent to $26.20.

BHP slipped 0.7 per cent to $37.94 while Rio Tinto lowered 1.1 per cent to $101.27. Fortescue fell 2.4 per cent to $9.00.

Meanwhile AMP was unchanged at $2.27 despite admitting it failed to properly supervise financial advisers who ripped off their clients.

The tech sector dragged on the market after the US Nasdaq lost 1.46 per cent on Monday night.

Locally, Computershare tumbled 8.5 per cent to $16.47 while Afterpay shed 4.9 per cent to $24.70. Appen fell 2.5 per cent to $24.12 while WiseTech Global lost 1.2 per cent to $22.28.

Lynas surged 14.5 per cent to $2.27 before trade was halted ahead of an announcement. The gains came after the rare earths producer announced plans to set up an initial processing facility in WA and invest in its processing facility in Malaysia.

Construction company James Hardie lifted 3.8 per cent to $18.50 after it announced a full-year profit rise as it cut its dividend.

Myer added 2.4 per cent to 65c on news it appointed retail veteran Jacquie Naylor to its board.

Nine Entertainment lost 2.6 per cent to $1.90 after it announced it had sold its events business for $31 million.

Seven West Media lowered 1 per cent to 50 cents following a profit warning.

The energy sector lost ground after oil prices initially rallied in the overnight session but then eased, as OPEC indicated it would maintain production cuts.

Santos was unchanged at $7.34 while Woodside Petroleum edged 0.1 per cent lower to $37.02. Oil Search inched down 0.1 per cent to $7.69 while Origin Energy lowered 1.5 per cent to $7.85.

Comments by RBA governor Philip Lowe that the Reserve Bank would consider the case for lower interest rates when it meets next month weighed on the Australian dollar, which was trading firmly lower at US68.72c in late trade.