Australian shares rose more than 1% on Thursday, led by banks and technology stocks, as solid US bank earnings and easing core inflation boosted sentiment globally, while a resilient local labour report kept alive chances of a near-term rate cut.
The S&P/ASX 200 index ended 1.4% higher at 8,327.00, a level unseen in a week. Index heavyweight financials led the gains, closing 2.6% higher.
Top lender Commonwealth Bank of Australia led the “Big 4” banks higher with a 3% jump, rallying after five straight sessions of losses.
Grady Wulff, a market analyst with Bell Direct, attributed the rise in banks to the overnight rally in the United States powered by a softer-than-expected core inflation and solid earnings from major US banks.
A domestic labour market report released earlier in the day showed a strong jump in jobs and an uptick in the jobless rate last month, a combination of trends signalling a healthy labour market that keeps the chances of a rate cut in February alive.
Swaps imply a 68% probability that the Reserve Bank of Australia will cut interest rates on Feb. 18.
A quarterly inflation report due later in the month will be a deciding factor for the central bank. Real estate stocks were among the top boosts to the benchmark, soaring 2.3% to their highest since Dec. 9.
Banks, pharmaceuticals drag Australian shares lower
Developers Goodman Group and Scentre Group climbed 3.2% and 0.6%, respectively. Tech stocks jumped 1.8%, with ASX-listed shares of Block Inc up 3.4%.
“Companies in the high-growth tech sector have greater runway to grow when interest rates are lower.
The combination of the Nasdaq rallying and the outlook for rate cuts in Australia are the key drivers of our local tech rally today,“ Wulff said.
In New Zealand, the benchmark S&P/NZX 50 index rose 0.4% to 13,000.67, their highest since Jan. 9.
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