Australian shares closed higher on Thursday, tracking strong overnight gains on Wall Street, while an unexpected dip in the country’s employment for April reinforced bets of a pause in rate hikes by the central bank at its meeting next month.

The S&P/ASX 200 index gained 0.5% to close at 7,236.80 points.

The benchmark ended 0.5% lower on Wednesday. Employment unexpectedly dipped in April, and the jobless rate also ticked up in a sign the red-hot labour market might be cooling, bolstering the case for a pause in rate hikes next month, Australian Bureau of Statistics’ data showed on Thursday.

“It has been a second softer day of economic data, showing the labour market is cooling. This does not mean that there won’t be more rate hikes coming potentially in July or August, but at least for the short term, data that came out does reduce some of the risks of RBA raising rates again,” said Tony Sycamore, analyst at IG Australia.

Meanwhile, US stocks rose sharply on Wednesday, fuelled by optimism over a potential deal on the $31.4 trillion federal debt ceiling.

In Sydney, miners finished 1.2% higher. Nufarm Ltd was the top gainer on the benchmark after rising 14.2% on higher half-year profit.

Australian shares extend losses on renewed rate-hike jitters

Technology stocks advanced 2.9%, tracking gains from US tech-heavy Nasdaq. Xero Ltd rose 8.9% to hit a one-year high after posting strong annual earnings.

Among individual stocks, Beach Energy Ltd fell 4.3% after it warned of delays in constructing the Waitsia Gas plant.

Heavyweight financials sub-index gained 0.7%, with so-called ‘big four’ banks up between 0.2% and 0.9% Gold stocks inched 1.1% lower as US debt-ceiling talks chipped away at the metal’s safe-haven appeal.

Newcrest Mining lost 1%. New Zealand announced a worse-than-forecast budget deficit as a slowing economy and a lower tax take hit at its coffers.

The benchmark S&P/NZX 50 index rose 0.2%, to close at 11,976.08.