Australian shares hit record highs as bank stocks rally

Australian shares hit record highs on Friday (Jul 12), led by banks, after data showed weaker-than-expected June US inflation and helped firm bets of an interest rate cut in September by the Federal Reserve.

The S&P/ASX 200 index hit an all-time high of 7,969.1 during the session, but trimmed some gains to log a record closing high of 7,959.3 points, 0.9 per cent higher, at the end of trade.

US consumer prices fell unexpectedly in June, boosting odds of a 25-basis-point rate cut in September to 85 per cent, according to CME FedWatch. A Fed rate cut would impact the Reserve Bank of Australia’s rate-cut stance as well.

Australian banks rose for a fourth consecutive session and were among the major gainers on the benchmark. They ended 1 per cent higher at a record-high close, driven by a 1.8 per cent rise in National Australia Bank.

The index gained 3.03 per cent in the four sessions.

“Banks also benefit from a healthier economy and expectations of lower interest rates as these can boost investor appetite and desire for loans,” said Tim Waterer, KCM Trade’s chief market analyst.

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Property developers Goodman Group, Scentre Group and Stockland Corp closed higher between 0.4 per cent and 3 per cent.

Core Lithium jumped 12.5 per cent, leading the gains among miners, which rose 0.5 per cent on higher commodity prices. Rio Tinto and Fortescue closed the day 0.2 per cent and 0.4 per cent higher, respectively.

However, BHP Group fell 0.4 per cent after it announced a temporary suspension of its nickel business in Western Australia amid a price plunge and oversupply issues.

Australian consumer stocks were also up on rate-cut possibilities. Electronics retailer Harvey Norman and home entertainment retailer JB Hi-Fi added 2.4 per cent and 1.3 per cent, respectively.

Tech dropped 1.2 per cent, tracking US stocks, which ended lower overnight after a drag in large-cap technology firms. Australian stock transfer company Computershare and software maker WiseTech Global lead losses in the index, falling 3.9 per cent and 3.4 per cent, respectively.

New Zealand’s benchmark S&P/NZX 50 index rose 0.6 per cent to a near 17-month high. The index logged the best week since early November, with a 2.9 per cent gain. REUTERS