Australia shares rise as bleak jobless data strengthens rate cut hopes
Australian shares rose on Friday and were on track for a fifth straight weekly gain, as an October rate cut by the country’s central bank appeared more certain following weak domestic jobless data that heightened growth concerns.
Sydney: Australian shares rose on Friday and were on track for a fifth straight weekly gain, as an October rate cut by the country’s central bank appeared more certain following weak domestic jobless data that heightened growth concerns.
The S&P/ASX 200 index firmed 0.6% or 42.7 points to 6,760.20 by 0235 GMT. It closed up 0.5% on Thursday.
Also Read: Australian August unemployment at one-year high, rate cut seen in October
The Australian jobless rate in August worsened to a one-year high of 5.3% in a sign of spare capacity in the labour market, reinforcing expectations of more stimulus from the Reserve Bank of Australia’s next policy meeting on Oct. 1.
Financial futures are now predicting a 76% chance of a rate cut by the RBA to 0.75%, from a 50-50 probability before the data.
“The fact that there is a confidence that the RBA will step in here and be aggressive with monetary policy and that it will happen as soon as next month, that is a positive for Australian stocks,” said Kyle Rodda, market analyst at IG Markets.
Also Read: Australian shares track regional gains after Fed cut; New Zealand up
The mining index, the top driver of gains on the benchmark, was lifted by gold stocks as a weak dollar spurred more buying of the precious metal.
Gold and copper explorer Aurelia Metals rose as much as 7.6%, while Dacian Gold climbed almost 6% to a near four-month peak.
With three of Australia’s “big four” banks trading higher, the financial subindex advanced about 0.4%, and was set for its fifth straight weekly gain.
Melbourne-based IOOF Holdings surged as much as 8.1% to its highest since early May, and was among one of top gainers on the main benchmark, after the Australian Prudential Regulation Authority (APRA) ruled that the wealth manager did not breach pension industry laws, and that it would not disqualify top IOOF executives.
APRA, in December, had alleged that the company failed to act in its customers’ interests.
In the energy space, a more than 1% rise in Brent crude oil futures, on the back of fears of longer-than-expected supply shortfalls following attacks on key Saudi oil facilities, helped the sector advance 0.6%.
Oil and gas major Woodside Petroleum rose almost 1%, while index heavyweight Santos climbed 1.4%.
The technology and healthcare sectors rose more than 1%, with logistics software maker Wisetech gaining over 3% and drugmaker CSL firming almost 2%.
Also Read: Record low rates deliver competitive advantages to Australia's biggest banks
Across the Tasman sea, New Zealand’s benchmark S&P/NZX 50 index rose 0.5% or 51.1 points to 10,852.12, driven by energy and consumer stocks.
Pushpay Holdings rose as much as 2.7% to its highest since July 29, after the electronic payments platform raised its earnings guidance. (Reuters)