Australian shares rode broad-based gains to a record peak on Tuesday, scaling past levels last seen before the global financial crisis as higher commodities powered miners. The S&P/ASX 200 index firmed 0.3%, or 19.3 points, to 6,845.1 at the close of trade, having touched an all-time high of 6,875.50 earlier in the session. The benchmark added 0.5% on Monday.
The run to a new high comes despite uncertainties around the economy as investors focus on relatively cheap valuations and the prospect of policy stimulus, Shane Oliver, head of investment strategy and chief economist at AMP Capital, said. Mining behemoths BHP Group and Rio Tinto Ltd, which have driven most of the benchmark's gains this year, firmed 0.6% and 0.2%, respectively.
The gains were underpinned by a 3% jump in Chinese iron ore futures, which boosted investor appetite for Australian miners. The wider Australian mining sector advanced 0.7% and has gained nearly 27% this year, outperforming most of the other sectors on the benchmark. However, the rally has also prompted some causes for concern, particularly as the market heads into earnings season.
"What does concern us is that certain parts of the Australian market look very aggressively priced," said Aaron Binsted, Portfolio Manager, Lazard Asset Management. "We believe there is a bubble in some growth stocks and this is classic late cycle behaviour." Rio Tinto rings the opening bell on the earnings season with its first-half results on Thursday, with analysts expecting iron ore prices to beef up the coffers of Australian miners.
Financials advanced 0.3% to a one-and-a-half year high, with the country's four biggest banks gaining between 0.2% to 1%. Meanwhile, the country's fourth largest firm CSL rose 0.6%, propelling the health care sector to its highest ever close. Bucking the trend, Crown Resorts dropped 1.9% to its lowest since June 24 after the attorney general ordered an investigation into allegations immigration officials gave the casino operator preferential treatment by fast-tracking visas for Chinese gamblers, the attorney general said on Tuesday.
Focus now shifts to the US Federal Reserve's two-day policy meeting, which starts later on Tuesday, with investors hoping that the central bank will signal the beginning of a policy easing cycle. Across the Tasman Sea, New Zealand benchmark S&P/NZX 50 index ended the session 0.3% or 27.59 points higher at 10,878.95. Gains were dominated by local shares of Westpac Banking Corp , which climbed to their highest since May 22.