Australian shares recover as Fed December rate-cut bets lift sentiment

Australian shares rebounded on Monday, led by banks, miners and industrial stocks, as growing expectations of a US interest rate cut next month spurred buying across sectors.

The S&P/ASX 200 index closed up 1.3% at 8,525.10, marking its strongest session since July 18.

The benchmark lost 2.5% last week.

“A positive lead from US markets on Friday, coupled with stronger futures today is enough to encourage a few investors to start putting more money back in markets,” said Craig Sidney, a senior investment adviser at Shaw & Partners.

Wall Street indexes rallied on Friday after New York Fed President John Williams said rates can fall “in the near term”.

Futures now point to a 57% chance that the Federal Reserve will cut rates by 25 basis points next month.

In Sydney, financials added 1%, with Commonwealth Bank of Australia rising 1.2%.

Industrial stocks jumped 2.7%, lifted by a 19.4% gain in Qube, after the logistics group received an A$11.6 billion ($7.49 billion) buyout bid from Macquarie Asset Management.

Miners advanced 1%, with Fortescue rising 1.9% and Rio Tinto adding 1.1%.

BHP ended up 0.6%, after the miner abandoned plans to buy Anglo American. Health and real estate stocks gained around 2%.

Energy stocks tracked oil prices lower and was the only sector in the red.

Investors are now awaiting Wednesday’s domestic consumer price inflation reading ahead of the Reserve Bank of Australia’s December policy meeting.

Meanwhile, New Zealand’s benchmark S&P/NZX 50 index ended 0.6% higher at 13,499.85.

Markets have fully priced in a quarter-point rate cut by the Reserve Bank of New Zealand on Wednesday.

“The RBNZ will likely signal a data-dependent easing bias, using forecast scenarios to cut through the fog of uncertainty and highlight how future policy will hinge on incoming data,” BofA analysts said.