Australian shares rose more than 1% on Friday, buoyed by hopes that the US Federal Reserve might be done raising interest rates, while investors braced for a Reserve Bank of Australia (RBA) policy meeting next week for further direction.
The S&P/ASX 200 index advanced 1.1% to 6,980.30 by 1116 GMT, driven by gains in heavyweight mining and financial stocks.
The benchmark has gained 2.3% so far in the week, heading for its best week since Sept. 1.
The Fed kept rates unchanged as expected on Wednesday and its chairman Jerome Powell acknowledged that central bank officials were willing to raise rates again if progress on inflation stalled in the country.
However, market participants are optimistic that rates have peaked and the Fed may not raise them again.
The RBA will likely raise interest rates on Nov. 9, after keeping rates steady for the past four months, with recent strong inflation and other economic data adding to its woes.
“The rates market is assigning a 50% probability of a 25bp rate hike from the RBA on Tuesday to 4.35%. This means there is ample room for equity market disappointment if the RBA does hike,” IG analyst wrote in a note.
Interest rate-sensitive financials climbed more than 1%, with the so-called “big four” banks rising over 1% each. Financials were on track for their best week since Sept. 15.
Miners gained 0.6%, with BHP Group and Rio Tinto rising 0.7% and 0.1%, respectively. Technology stocks jumped 1.5% to hit their highest level since Oct. 19. For the week, they have risen 4.6%, on track for their best week since July 14.
Banks, mining stocks lift Australian shares after Fed holds rate
Among individual stocks, Macquarie Group fell as much as 3.2% after the financial conglomerate reported its lowest half-year profit in three years.
New Zealand’s benchmark S&P/NZX 50 index advanced 0.8% to 11,128.47.
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