Australian shares closed more than 1% higher on Tuesday, marking their best day since early January, led by a surge in commodity stocks on hopes of Chinese economic stimulus and signals that the US Federal Reserve was nearing the end of its tightening cycle.
The S&P/ASX 200 index finished 1.5% higher at 7,108.90, snapping four sessions of decline. The benchmark lost 0.5% on Monday.
Commodity stocks rallied after the country’s largest trade partner, China’s producer prices fell at their fastest pace in over seven years in June, while consumer prices teetered on the edge of deflation, adding to the case for policymakers to use more stimulus to revive sluggish demand.
“It looks like we’re starting to see some of the stimulus from China, which is badly needed over there to support the property market, which is made from iron ore, and accounts for about 35% of China’s fuel consumption.
Hence, ASX 200 has had a pretty good day“, said Tony Sycamore, market analyst at IG Australia.
Adding to the optimism were the Fed officials’ comments that the US central bank may be near the end of its tightening cycle, while markets await the crucial CPI data due on Wednesday.
Meanwhile, the modest 2.7% rise in Australian consumer sentiment added little to the mood as the Reserve Bank Australia held rates steady at 4.1% last week, in the middle of the survey period. Heavyweight miners advanced nearly 2%.
Australian shares pare gains to close lower; US inflation data in focus
Sector majors BHP Group and Rio Tinto rose 1.4% and 1.3%, respectively.
Gold stocks climbed 3.5%. Top gold miners Newcrest Mining gained 1.8% and Northern Star Resources added 3.1%.
Energy stocks advanced 1%, with heavyweights Woodside Energy and Santos up 1.1% and 0.8%, respectively. Banks followed suit, rising 1.5%.
The so-called “Big Four” banks rose between 1.1% and 2.3%.
In New Zealand, the central bank will likely keep interest rates unchanged at 5.50% on Wednesday and through rest of the year.
The benchmark S&P/NZX 50 index finished flat at 11,909.81.
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