Australian Shares Reach Record Highs Amid Rate Cut Hopes

July 12, 2024 03:32 PM AEST | By Team Kalkine Media

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Australian Shares Reach Record Highs Amid Rate Cut Hopes — Image source: Pexels

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Mining Weakness and Gold Drop Weigh on Australia Share Market

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Australian shares soared to record highs on Friday, driven by gains in heavyweight miners and banks following an unexpectedly soft U.S. inflation reading. This bolstered expectations for a September interest rate cut by the Federal Reserve. The S&P/ASX 200 index (INDEXASX: XJO) rose 0.84% to 7,956.30, achieving its all-time high (3:29 PM AEST on 12 July 2024). The benchmark ended 0.9% higher on Thursday and is on track for its best week in more than a month.

Global Market Relief from U.S. CPI Data

Investors globally found relief after the U.S. consumer price index (CPI) dipped in June, contrary to the slight rise predicted by the market. The CPI report, alongside last week's jobs data indicating a cooling U.S. labor market, suggests that the Federal Reserve might start cutting rates soon. Such a move by the Fed would influence the Reserve Bank of Australia's rate-cut stance, providing further support to the Australian market.

Financials and Miners Lead the Rally

Rate-sensitive financials (INDEXASX: XFJ) hit a record high, rising 0.7%, marking their fourth consecutive session of gains. All "Big Four" banks saw their stocks increase between 0.5% and 1.6%. Heavyweight miners (INDEXASX: XMM) advanced 0.6%, driven by a rise in iron ore prices amid hopes that China, the top buyer, will announce additional stimulus at its upcoming key meeting.

Sector-Specific Performances

While most sectors enjoyed gains, BHP Group (ASX: BHP) dipped 0.41% following its announcement to suspend Western Australia nickel operations. Despite this, the energy sector (XEJ) traded positively, gaining 0.6% due to rising global oil prices. Additionally, the healthcare sub-index (XHJ) added 1.2%, reaching its highest level since June 2023.

New Zealand Market Trends

The positive momentum extended to New Zealand, where the benchmark S&P/NZX 50 index (.NZ50) rose 0.5% to 12,110.8000 by 0049 GMT, its highest level since February 2023. The benchmark has gained 2.7% so far this week and is on track for its best week since the week ending November 3, 2023.

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