Softer inflation data boosts rate-sensitive stocks
Banks rise to more than one-week high
ASX 200 eyes fourth consecutive month of gains
July 30 (Reuters) – Australian shares rallied to a record close on Wednesday, led by heavyweight banks as softer inflation data boosted hopes for an interest rate cut next month, while improved prospects of an extension to the Sino-U.S. trade truce added to the relief.
The S&P/ASX 200 benchmark index closed 0.6% higher at 8,756.40 points. The benchmark is on track to close July nearly 2% higher, its fourth straight month of gains.
Australian consumer prices grew at the slowest pace in over four years in the June quarter, adding to the mounting pressure on the Reserve Bank of Australia to reduce borrowing costs at its policy meeting next month.
“It (inflation data) also lowers the bar for faster and deeper easing ahead of year-end as disinflation broadens across both goods and services,” Hebe Chen, market analyst at Vantage Markets said.
Banks, among the biggest beneficiaries of lower interest rates, led the financial index 1.1% higher to a more than one-week high. All the “Big Four” banks advanced between 0.7% and 1.6%.
Rate-sensitive real estate stocks climbed 1.3%. Mirvac Group added 2.7%, while Dexus rose 1.4%.
Meanwhile, U.S. and Chinese officials agreed to seek an extension of their 90-day tariff truce, defusing an escalating trade war between the world’s two biggest economies that threatens global growth.
For Australia, the news offers a welcome reprieve -stabilising export demand for iron ore and LNG and providing near-term support for resource-heavy firms amid ongoing external uncertainty, said Chen.
Miners ended marginally lower with BHP down 0.5% and Rio Tinto ending 1% lower. The world’s biggest iron ore miner is expected to announce its interim results after market close.
Energy stocks ticked 0.1% down, while gold stocks rose 0.3%.
New Zealand’s benchmark S&P/NZX 50 index fell 0.6% to 12,855.97 points. (Reporting by Sneha Kumar in Bengaluru; Editing by Harikrishnan Nair)
