Australian Shares Hit Record High as Investors Anticipate U.S. Rate Cut

2 min read | September 18, 2024 02:48 PM AEST | By Team Kalkine Media

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Australian Shares Hit Record High as Investors Anticipate U.S. Rate Cut — Image source: shutterstock

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Australian shares reached an all-time high on Wednesday, driven by gains in financials and commodity stocks. The S&P/ASX 200 index (ASX:XJO) was up 0.1% at 8,151.4 points, surpassing the previous record of 8,150.5 points set on Tuesday. This milestone comes as investors eagerly await a key policy meeting by the U.S. Federal Reserve, which is expected to cut interest rates for the first time in over four years.

U.S. Retail Sales Impact

U.S. retail sales for August rose unexpectedly, potentially complicating the Fed's decision-making process. This data could weaken the case for a more aggressive rate cut. Despite this, market expectations are still leaning towards a significant rate reduction, with the CME’s FedWatch Tool indicating a 66% probability that the Fed will lower borrowing costs by 50 basis points.

Sector Performance

Miners: The mining sector saw notable gains, rising as much as 0.8%. Major players like BHP (ASX:BHP), Rio Tinto (ASX:RIO), and Fortescue Metals (ASX:FMG) advanced between 0.5% and 1.3%.
Financials: Financial stocks increased by 0.4%, with the "Big Four" banks advancing between 0.3% and 0.9%.
Energy and Gold: Energy stocks were up 0.2%, while gold stocks edged higher by 0.1%. Brent crude futures rose to $73.75 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped slightly by 0.04% to $71.16 per barrel. Gold prices also saw a marginal increase of 0.09% to $2,572.20 per ounce.

Lagging Sectors

Technology and Healthcare: Technology and healthcare stocks were the laggards, each shedding as much as 0.8%.

International Markets

In the U.S., the Dow Jones Industrial Average (DJI) fell by 15.90 points, or 0.04%, to 41,606.18 points. The S&P 500 (SPX) gained 1.49 points, or 0.03%, while the Nasdaq (IXIC) was up 35.93 points, or 0.20%.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index (NZ50) was down 0.2% at 12,643.56 points.

Looking Ahead

Australian investors are awaiting August jobs data, set to be released on Thursday, which could influence the Reserve Bank of Australia's monetary policy stance. The interplay of domestic and international factors will be crucial in shaping market movements in the coming days.

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