On Thursday, Australian shares experienced a significant surge, edging tantalizingly close to their all-time high, buoyed by market speculation surrounding potential interest rate cuts by the Reserve Bank of Australia. The S&P/ASX 200 index rallied impressively by 1.7%, marking its most substantial single-day gain of 2024 and landing just 0.2% shy of its record closing peak set on March 28. This remarkable upswing was largely attributed to the unexpected uptick in Australia's jobless rate, which climbed from 3.9% in March to 4.1% in April, despite a robust increase of 38,500 individuals securing employment, fueled in part by a surge in immigration.
Economists, including those at Commonwealth Bank, interpreted this data as indicative of a softening labor market, reinforcing their projections for the Reserve Bank of Australia to commence a cycle of interest rate reductions starting as early as November. Consequently, market sentiment was notably bullish, with investors expressing confidence in the prospect of monetary policy adjustments aimed at supporting the country's slowing economy.
As a result of this optimism, the Australian dollar experienced a modest decline, reaching $US66.8¢ at the market's close, having briefly surpassed the $US67¢ mark earlier in the day. Concurrently, the yield on 1-year Australian government bonds dipped by 4 basis points to 4.22%, slipping below the prevailing cash rate of 4.35%.
In the global arena, Wall Street also witnessed record-setting performances, with the S&P 500 soaring by 1.2% to close at an unprecedented 5308.15 points, and the Nasdaq registering a 1.4% advance. Back home, specific sectors drove the Australian market's ascent, notably technology, retail, and property, which each recorded gains of 3.3%, 2.5%, and 3.4%, respectively.
Notable individual stocks contributing to the day's rally included cloud accounting giant Xero, which surged by 4.8% to $127.54, alongside WiseTech Global and Pro Medicus, both achieving record highs with gains of 4.4% and 2.8%, respectively. Additionally, Aristocrat Leisure emerged as a standout performer, surging by an impressive 12.3% to $45.75, following the announcement of a net profit increase of 16.8% for the six months ending March 31.
Despite the overall market optimism, some companies faced challenges. Incitec Pivot revealed plans to divest its fertilizers business amidst a $148 million loss for the same period, yet its stock managed to climb by 5.3% to $2.97. Similarly, GrainCorp attributed a decline in profits to adverse weather conditions, although its shares still managed to inch up by 0.9% to $8.14.
In summary, the day's trading was characterized by robust investor confidence driven by expectations of impending interest rate cuts, leading to significant market gains across various sectors and individual stocks, despite some companies grappling with underlying challenges.
At the closing bell, the S&P/ASX 200 was 1.65 per cent higher at 7,881.30.
Futures
The Dow Jones futures are pointing to a rise of 30 points.
The S&P 500 futures are pointing to a rise of 3.75 points.
The Nasdaq futures are pointing to a rise of 23 points.
The SPI futures are up 127 points.
Best and worst performers
The best-performing sector was REITs, up 3.48 per cent. The worst-performing sector was Energy, down 0.29 per cent.
The best-performing large cap was Aristocrat Leisure (ASX:ALL), closing 12.30 per cent higher at $45.75. It was followed by shares in Incitec Pivot (ASX:IPL) and Xero (ASX:XRO).
The worst-performing large cap was Whitehaven Coal (ASX:WHC), closing 1.46 per cent lower at $7.41. It was followed by shares in Amcor plc (ASX:AMC) and Aurizon Holdings (ASX:AZJ).
Asian markets
Japan's Nikkei has gained 1.39 per cent.
Hong Kong's Hang Seng has gained 1.87 per cent.
China's Shanghai Composite has gained 0.21 per cent.
Commodities and the dollar
Gold is trading at US$2,393.00 an ounce.
Iron ore is 0.8 per cent lower at US$114.15 a tonne.
Iron ore futures are pointing to a 2.61 per cent rise.
Light crude is trading $0.33 higher at US$78.96 a barrel.
One Australian dollar is buying 66.77 US cents.
