ASX200 hits record high of 7959 points on US Fed rate cut fever

The Australian sharemarket has closed out the week on a record high as investors position themselves for imminent US Federal Reserve rate cuts.

The share market soared to a record high on Friday as investors cheered the prospect of imminent central bank rate cuts in the world’s largest economy.

The benchmark ASX200 jumped 0.88 per cent to finish at a record 7959.3 points, marking a 1.2 per cent gain across the week.

The broader All Ordinaries index lifted 72.7 points, or 0.89 per cent, to close at 8206.1.

Tech stocks slipped 0.68 per cent to close at 3122.7.

The rally was broad-based, with 10 of 11 industry sectors ending in the green, led by rate-sensitive real estate with a rambunctious 2 per cent rise.

Mirvac leapt 4.15 per cent to $2.01 a share while Stockland gained 3.44 per cent to $4.51.

The big banks also propelled the rally, with Commonwealth Bank notching a new record high of $131.66 a share.

The giant’s surge means it has overtaken mining behemoth BHP as Australia most valuable company with a market capitalisation of $220bn.

Westpac lifted 1 per cent to $27.90, NAB jumped 1.91 per cent to $36.89 and ANZ rose 0.8 per cent to $29.58.

Friday’s jubilation followed a cool inflation print in the US overnight Thursday, which solidified expectations of impending rate cuts from the US Federal Reserve.

The Commonwealth Bank Branch in Martin Place, Sydney. The bank is now Australia’s largest company after Friday’s rally. Picture: NewsWire / John Appleyard

Headline inflation fell by 0.1 per cent from May to June, pulling to the annual rate down to 3 per cent.

“Money markets are almost fully pricing in a 25 basis point rate cut from the Fed in September and 61bp of easing over the remainder of 2024,” IG market analyst Tony Sycamore said.

A sharp sell-off in mega-cap tech stocks pulled the S and P 500 index down 0.88 per cent to 5584 and pummelled the tech-heavy Nasdaq, which slumped nearly 2 per cent to 18,283.

Chip giant Nvidia lost 5.57 per cent and carmaker Tesla shed 8.44 per cent.

The Dow Jones gained 32 points, or 0.08 per cent, to 39,753.

But Wall St’s tech rout couldn’t outstrip Fed fever on the local bourse, eToro market analyst Josh Gilbert said.

“The Fed cutting rates is huge for the rest of the world and has implications for the rest of the world so that is positive for stocks broadly,” he said.

“As we move closer to those rate cuts, we will begin to see a rotation into those cheaper cyclical sectors and really that’s what we’re seeing on the local market today.

Boardroom drama has hit Rex Airlines. Picture: NewsWire / Gaye Gerard

“We’ve got more a focus towards value, like consumer discretionary and real estate.”

The big miners were mixed, despite a 1.5 per cent gain in iron ore prices to nearly $109 a tonne.

BHP slipped 0.37 per cent to $43.40 after announcing a shut down of its nickel operations in WA.

Rio Tinto edged up 0.18 per cent to $119.83 and Fortescue lifted 0.45 per cent to $22.10.

In corporate news, boardroom drama has hit Rex Airlines.

Former executive chairman Lim Kim Hai, a significant shareholder in the company, has called for a meeting to remove four directors from the board.

The stock traded flat to close at 60c.

The top gainer on the ASX200 was Domain Holdings, which leapt 6.88 per cent to $3.26.

The biggest laggard was Computershare, which slumped 3.85 per cent to $26.20.

The Aussie dollar gained 0.17 per cent to buy US67.7c at the close.

Originally published as ASX200 hits record high of 7959 points on US Fed rate cut fever