Australian shares jumped on Thursday to a seven-week closing high, as global equities advanced after the US central bank raised interest rates on expected lines and comments from its chairman lifted investor hopes for a slower pace of rate hikes.
The S&P/ASX 200 index rose 1% to 6,889.70, its highest close since June 10.
The benchmark had gained 0.2% on Wednesday. The US Federal Reserve lifted interest rates by 75 basis points to 2.25-2.5%, but Chair Jerome Powell dropped guidance on the size of the next rate hike and noted that “at some point” it would be appropriate to slow down.
“The local market is carrying over the positive US sentiment today,” said Kerry Craig, a global market strategist at JP Morgan. Wednesday’s lower-than-expected Australian inflation data also kept investor sentiment supported.
Craig said it may be a little longer before the inflation rate peaks for Australia, but there are signals that some of the pressures have started to fade.
“This means that the RBA (Reserve Bank of Australia) is likely to move in line with the current market pricing of a 50-bp increase… we expect that the RBA will keep its hawkish tone and push rates into restrictive territory this year,” he said.
Mining stocks rose 2.7% to lead gains on the benchmark, boosted by rebounding steel margins in China.
The sub-index closed at its highest level since July 5, with heavyweights BHP Group and Rio Tinto up 2.1% and 0.7%, respectively.
Financial stocks firmed 0.8%, with three of the so-called “big Four” banks rising between 0.1% and 1%, while Australia and New Zealand Banking Group dropped 0.1%.
Australian shares rise after Q2 inflation data allays sharp rate hike fears
Investment bank Macquarie Group rose 3% after posting a higher first-quarter profit.
Gold stocks climbed 2.4% on firmer bullion prices, while energy stocks advanced 1.3% after crude prices extended gains on improved risk appetite.
New Zealand’s benchmark S&P/NZX 50 index rose 1.9% in its best session in nearly five months to close at 11,328.19.
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