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Australian shares saw a slight uptick on Wednesday after enduring two consecutive days of declines. The increase was primarily driven by gains in commodity stocks, following China’s announcement of a significant stimulus package aimed at rejuvenating its economy. The S&P/ASX 200 index rose by 0.1%, reaching 8,148.80, after closing down 0.1% on Tuesday. Meanwhile, the Australian dollar experienced a boost, peaking at $0.6907 in early Asian trading—the highest level since February 2023.
Investors are eagerly awaiting the August consumer price index (CPI) report, which is expected to provide insights into the Reserve Bank of Australia's monetary policy outlook. Just the day before, the central bank opted to keep interest rates steady, emphasising the need for a sufficiently restrictive policy to ensure inflation returns to target levels.
On Tuesday, China’s central bank revealed its most substantial stimulus measures since the pandemic, aiming to pull the economy out of a deflationary slump and toward its growth targets. This announcement spurred positive momentum in the Australian market, particularly among mining stocks, which surged by 2.4% to hit a two-month high. The increase in iron ore prices, which posted their largest daily gain in over a year, benefited major players like Rio Tinto (ASX:RIO) and BHP (ASX:BHP), whose shares rose by 1.9% and 2.5%, respectively.
Gold stocks also saw notable gains, jumping as much as 2.6% to their highest levels since November 2020, following a 1% increase in bullion prices that reached a record high. Additionally, energy stocks rose by 0.9% after oil prices experienced a nearly 2% surge in response to the news of China’s economic stimulus.
Conversely, the financial sector faced pressure, with the S&P/ASX Financials index declining by 1.3%. The "Big Four" banks recorded losses ranging between 1% and 2.8%, contributing to the overall downward trend in the sector.
In terms of individual stocks, Premier Investments emerged as the biggest loser on the benchmark index, plummeting nearly 8.4% after reporting a 5% drop in annual profit. This disappointing earnings report raised concerns among investors regarding the company’s performance and future prospects.
Overnight, U.S. markets exhibited positive momentum, with the Dow Jones Industrial Average rising by 0.20%, the S&P 500 gaining 0.25%, and the Nasdaq increasing by 0.56%.
In New Zealand, the benchmark S&P/NZX 50 index remained largely unchanged at 12,308.89. However, shares of dairy exporter Fonterra saw a significant increase, rising by 6.9% to reach their highest levels since July 2021. This surge occurred despite the company reporting a 25% drop in annual profit, as it declared a special dividend, underscoring its commitment to returning value to shareholders.
