Australian shares edged higher on Wednesday, with the benchmark logging its fifth straight session of gains, buoyed by domestic mining stocks on strong commodity prices, while risk appetite improved on the expectations of the U.S. Federal Reserve steering away from rate hikes.
The S&P/ASX 200 index closed 0.7% higher to 7,088.4 points, logging a three-week high.
Interest rate jitters among market participants eased as further remarks from the Fed’s top official on Tuesday indicated the central bank may not resort to increasing borrowing costs further and that the policy in place was sufficiently restrictive.
Australian shares jump most in four weeks on Fed’s dovish hints
Meanwhile, higher interest rates are working in Australia to cool demand and slow inflation, according to statements from a top central banker.
Local miners climbed 1% marking their highest since Sept. 21 with BHP Group, Rio Tinto and Fortescue Metal each advancing between 1% and 1.7%.
The sub-index tracked rising metal and iron ore prices on hopes of renewed demand from China, the country’s largest trading partner.
Financials followed suit and jumped 0.4% with National Australia Bank and ANZ Group gaining 0.5% and 0.3%, respectively.
Bank of Queensland marked its biggest percentage drop in four months, losing nearly 7.5%, after the lender declared a dividend cut on subdued annual profits.
“If rates stay on hold, (it) takes a lot of pressure off banks and gives people more confidence to hold the banks,” said Brad Smoling, Managing Director of Smoling Stockbroking.
Smoling also added that he sees the equity market “rallying” in the fourth quarter of the year.
Energy stocks rose 0.7%, tracking gains in oil prices over possible supply disruptions pertaining to the ongoing conflict in the Middle East.
Woodside Energy and Santos advanced over 0.6%, each.
New Zealand’s benchmark S&P/NZX 50 index rose 0.1%, touching a two-week high.
Channel Infrastructure NZ and Contact Energy topped gains on the benchmark adding 2.0%, each.
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