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Highlights

  • ASX 200 climbs past 8,800 for the first time, rising 0.6% to a record 8,820.80 points.

  • Miners, gold stocks, and banks lead market gains on rising commodity prices and easing rate outlook.

  • Markets price in a 99% chance of an RBA rate cut on August 12, following soft economic data.

Australian shares advanced to a record high on Wednesday, buoyed by investor optimism around potential interest rate reductions and broad-based gains in mining, banking, and gold sectors. The S&P/ASX 200 index rose 0.6% to close at 8,820.80 points, crossing the psychological barrier of 8,800 for the first time.

The gains were driven in part by growing market confidence that the Reserve Bank of Australia (RBA) will lower interest rates at its upcoming policy meeting. Interest rate swaps currently reflect a 99% probability of a quarter-point cut on August 12, following recent signs of cooling in the domestic economy.

Economic Indicators Fuel Rate Cut Bets

Investor sentiment was further influenced by subdued economic data released earlier in the week. A joint report by ANZ and job site Indeed indicated a 1% decline in job advertisements during July, suggesting a possible slowdown in hiring momentum. Meanwhile, government figures showed a modest rise in household spending in June, offering little sign of inflationary pressure.

These indicators reinforced expectations that the RBA may move to support the economy through monetary easing, aligning with a broader trend of dovish sentiment globally. In the United States, rate cut expectations have also risen, with the likelihood of a Federal Reserve reduction in September standing at around 92%, up from 63% in late July, according to CME’s FedWatch tool.

Miners, Gold Stocks, and Banks Drive Gains

On the local bourse, materials and financials outperformed, contributing significantly to the index’s record run. The mining sector gained 1.1%, bolstered by stronger iron ore prices, while gold stocks surged 3.5% in response to rising bullion prices.

Banks also posted notable gains, with the financial index climbing 0.8%. Among the “big four” lenders, shares rose between 0.3% and 1.1%.

REA Group was among the day’s top-performing individual stocks, jumping nearly 10%—its biggest intraday gain in two and a half years. The online real estate company, controlled by News Corp, reported higher full-year profits and announced an increase in dividend payouts.

New Zealand Market Steady as Labour Data Matches Expectations

Across the Tasman Sea, New Zealand’s S&P/NZX 50 index edged up 0.2% to 12,904.18 points. Local data showed a slight rise in the unemployment rate in the second quarter, in line with forecasts from the Reserve Bank of New Zealand (RBNZ). Markets have priced in an 85% probability of a 25-basis point cut by the RBNZ on August 20, with expectations of another cut by early next year.

With easing inflationary signals and global central banks leaning toward accommodative policies, market watchers will be closely tracking the RBA’s decision next week.