The S&P/ASX 200 index rose 0.8% to 8,532.70 points at the close of trade. The index also finished the day just shy of the record closing level touched on February 14.
Australia’s economy grew 0.2% on lower consumer and government spending, data on Wednesday showed, missing market forecasts and reinforcing the need for further rate cuts by the Reserve Bank of Australia (RBA).
This is further evidence for the RBA to cut rates in July as inflation continues to remain in the 2-3% target range, said Grady Wulff, market analyst at BellDirect, adding that other drivers continued to trend in favour of more rate easing.
Swaps imply an 82% probability of a July rate cut, up from 77% before the data. The central bank made a 25-basis-point cut on May 20.
Financial stocks continued to benefit as a low-rate environment translated to higher lending volumes, rising 1% on the day. Top lender Commonwealth Bank of Australia became the first ASX-listed stock to surpass a market value of A$300 billion ($193.59 billion) on Wednesday with a 0.8% gain, according to LSEG data. However, the main risk to banks would be the economy continuing to weaken, “which could lead to an increase in defaults and delinquencies or bad debts in their loans,” said Shane Oliver, chief economist and head of investment strategy at AMP.
Consumer discretionary stocks rose 1.2%, with electronic retailer JB Hi-Fi leading the charge, spurred by expectations of cheaper financing.
Lynas, the world’s biggest producer of rare-earths minerals outside China, rose 2.8% after global automakers flagged production delays citing China’s stranglehold on the critical minerals.
New Zealand’s benchmark S&P/NZX 50 index rose 1.4% to 12,494.71 points to finish the session. ($1 = 1.5497 Australian dollars)
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