Australian shares hit record close as rising rate cut bets lift risk appetite

Published on 08/05/2025 at 03:06 am EDT

• ASX 200 closes at all-time closing high of 8,770.40 points
• Gold stocks jump more than 2%
• Miners, banks rise more than 1% each

(Reuters) - Australian shares closed at a record high on Tuesday, lifted by broad-based gains, particularly in interest rate-sensitive sectors such as banks and real estate, as markets fully priced in rate cuts at home and abroad.
The S&P/ASX 200 index rose 1.2% to finish at 8,770.40 points, the highest-ever closing level, and just six points shy of the all-time high scaled on July 18.
Rising bets for rate cuts by the U.S. Federal Reserve and the Reserve Bank of Australia (RBA) improved appetite for risk assets globally.
Odds of a Fed rate cut in September now stand at about 94%, per CME Fedwatch, up from a 63% chance seen on July 28.
In Australia, swaps indicate that a quarter-point rate cut next week is a done deal, with more than 99% of the market pricing in a cut.
"The U.S. Fed rate does underpin the valuation for risk assets globally, so it will definitely be a tailwind for global equities as the Fed cuts," said Luke Winchester, a portfolio manager at Merewether Capital.
"Central banks tend to act in tandem as countries face the same global pressures, so I expect the RBA (to) continue to cut alongside the Fed."
Heavyweight financial stocks gained 1.5%, with the "Big Four" banks rising between 1.4% and 1.6%. Top lender CBA added 1.4%.
Rate-sensitive real estate stocks climbed 1.4%, while tech stocks advanced 1.3%, tracking Wall Street's overnight rally.
The benchmark index was also lifted by higher iron ore and gold prices, which helped mining and gold stocks advance 1.1% and 2.1%, respectively.
Winchester expects the benchmark to continue scaling new heights as miners pick up the slack and falling rates boost REIT s and cyclicals such as discretionary consumer stocks.
In New Zealand, the benchmark S&P/NZX 50 index rose 1.5% to 12,877.04 points. (Reporting by John Biju in Bengaluru; Editing by Sumana Nandy)

Sumber : Reuters