Australian shares scale new high on US rate-cut bets

Australian shares rose to a record high on Monday, after US Federal Reserve Chair Jerome Powell last week pointed to a possible rate cut at the central bank’s September meeting.

The S&P/ASX 200 index climbed as much 1% to a fresh high of 9,054.50 by 0041 GMT, with all sectors except consumer staples trading in positive territory.

The benchmark fell 0.6% on Friday.

On Friday, Powell alluded to a possible interest rate cut at the central bank’s September 16-17 meeting, but stopped short of committing to a reduction.

Futures are pricing in an 84% chance of a quarter-point rate cut in September, and at least 100 basis points of easing to 3.25-3.5% by the middle of next year.

Rising bets of US rate cuts are generally seen as positive for Australia as the local central bank also takes cues from the Fed.

The world’s largest economy is one of the top trading partners and investment sources for Australia.

In Sydney, heavyweight financials rose 0.4%, with National Australia Bank up 0.7%. Miners jumped 2.5%, with BHP Group and Rio Tinto rising 2.4% and 2.1%, respectively, while Fortescue climbed 2.2%.

Gold stocks rose 2.5% to hit their highest level since mid-June.

Northern Star Resources and Evolution Mining climbed 2.7% and 1.9%, respectively.

Technology stocks jumped 0.9%, while energy stocks climbed 1.1%.

In corporate news, oil and gas producer Santos extended exclusivity period for the $18.7 billion ADNOC-led offer and posted a 22.3% drop in half-yearly earnings. Its shares were up 1%, in line with the energy sub-index.

Ansell rose 11.8% after the safety solutions provider posted higher annual operating earnings and declared a $200 million share buyback programme.

Reece fell 21.8% in its biggest intraday drop ever after the plumbing and waterworks supplier reported full-year results below expectations. New Zealand’s benchmark S&P/NZX 50 index advanced 0.7% to 13,137.67.