Australian shares rose on Thursday, supported by banking and technology stocks after the US Federal Reserve kept interest rates unchanged, while local labour market data showed the central bank may have to hike rates further.
The S&P/ASX 200 index advanced 0.2% to 7,175.3 points, their fourth session of consecutive gains.
The US Federal Reserve kept its policy rate unchanged on Wednesday, but signalled that hikes of as much as half a percentage point would be required by the end of the year to rein in inflation.
Australian shares end higher on Wall St strength, rate-hike pause bets
Meanwhile, local jobs report showed Australian employment blew past expectations in May, while the jobless rate edged lower and participation rate climbed to a record high.
The strong jobs report adds to the case that the Reserve Bank of Australia (RBA) might have to increase rates further to bring the inflation in the country under control.
“The very strong increase in employment in May and the decline in the unemployment rate … now makes a July rate hike from the RBA more likely than not,” analysts at ANZ Group said, adding that they expect quarter-point hikes in both July and August.
Heavyweight mining stocks gained 0.2% after China cut the borrowing cost of its medium-term policy loans, while data showed that industrial output and retail sales growth missed forecasts in May.
“A lower medium-lending facility interest rate, together with a cheaper yuan, could lay the groundwork for more stimulus,” said Glenn Yin, head of research and analysis at AETOS Capital Group.
Financial stocks gained 0.8% with all of the so-called “big four” banks ending in the green.
New Zealand’s benchmark S&P/NZX 50 index advanced 0.1% to 11,687.45 points.
The nation slipped into a recession in the first quarter, reducing the risk of the central bank hiking interest rates further.
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