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ASX surges as traders bet on rate cuts

ATO MARTIN PLACE
After fresh data showed the Australian economy “hit the wall” in the September quarter, traders ramped up their bets that the RBA would start cutting interest rates, sending the share market higher. Picture: NCA NewsWire / Jeremy Piper

The Australian share market soared on Wednesday with the benchmark posting its biggest daily gain in more than a year on hopes that the Reserve Bank is done raising rates.

The benchmark S & P/ASX200 index vaulted 1.7 per cent, or 116.8 points, to reach 7,178.4. It’s the strongest daily increase since November 11, 2022. The broader All Ordinaries also surged, adding 1.6 per cent, to finish at 7,386.7 at the end of trading.

The Australian dollar rebounded, climbing to US65.85c at the closing bell.

All 13 industry sectors finished in the green, led by a rally in real estate stocks which soared 3.2 per cent.

Sector heavyweight Charter Hall surged 4.4 per cent to $10.62, Dexus climbed 3 per cent to $7.23 and Lendlease added 4.1 per cent.

Supplied Editorial Charter Hall $450m office development under construction at 60 King\n William St, Adelaide. Picture: Giuseppe Tauriello
Interest rate sensitive real estate stocks soared as investors ramped up their bets that the Reserve Bank would start cutting rates in late 2024. Picture: Supplied.

Elsewhere on the benchmark, the materials sector performed strongly adding 1.2 per cent as iron ore miners tracked increasing prices for the commodity. Mining giant BHP added 1.5 per cent to $47.23 while Rio Tinto climbed 0.7 per cent to $126.45.

All of the big four banks finished in the green. Commonwealth Bank rose 1.6 per cent to $106.34, NAB soared 1.9 per cent to $29.32, Westpac jumped 1.7 per cent to $21.79 and ANZ firmed 1.3 per cent to $24.70.

Fresh national accounts data, released on Wednesday, showed the economy expanded by just 0.2 per cent in the September quarter, far weaker than economists had anticipated.

In response, traders sharpened their rate cut bets with the market now fully pricing a rate cut by the end of 2024.

“Australia’s economy hit the wall in the September quarter,” Westpac senior economist Andrew Hanlan said in a note to clients.

Annual growth had fallen 0.3 per cent in per capita terms, Mr Hanslan said, while rapid population growth, which has risen 2.4 per cent in the last 12 months, had underpinned overall increases in spending across the economy.

“The intense headwinds of high inflation, sharply higher interest and additional tax obligations are having a significant impact, leading to a sharp decline in real household disposable income.”

In company news, shares in Perpetual climbed 6.3 per cent to $23.76, their biggest intraday percentage gain since November 2022. The firm announced a strategic review of its corporate trust and wealth management businesses.

Embattled money manager Magellan Financial said its funds under control had risen from $34.3bn in October to $35.2bn in November. Shares added 3.6 per cent to $7.83.

Oil and gas giant Woodside announced a new deal to firm its supplies. Picture: NCA NewsWire / Sharon Smith
Oil and gas giant Woodside announced a new deal to firm its supplies. Picture: NCA NewsWire / Sharon Smith

Woodside Energy added 1.1 per cent to $29.84 after the oil and gas giant announced it had signed a deal with Mexico Pacific to buy 1.3 million metric tonnes of LNG for the next 20 years.

Shares in hospitality and gaming company Endeavour Group jumped 2.4 per cent to $5.20 after it said it expects to grow earnings in its hotels division by more than $150 million in the next five years.