Australian shares post the best day in almost 7 weeks as miners, financials gain

AUSTRALIAN shares rose on Monday (May 29) by their most in almost seven weeks, led by mining and financial stocks, as global sentiment was boosted by a deal between US President Joe Biden and House Speaker Kevin McCarthy to suspend the government’s debt ceiling.

The S&P/ASX 200 index closed 0.9 per cent higher at 7,217.4-points, posting its biggest daily gain since April 11.

After weeks of negotiations, McCarthy and Biden forged an agreement late on Saturday to avert an economically destabilising default to suspend the $31.4 trillion debt ceiling until 2025. The deal will now have to passes through the narrowly divided Congress.

“Australian stocks are playing a little bit of a relief rally on hopes that maybe the US will not default for the upcoming future,” said Henry Jennings, a senior Analyst at Marcustoday Financial Newsletter.

Commenting on the near-term outlook for Australian stocks, Jennings said June can go into the doldrums a little bit due to stock loss selling and tax loss selling, as well the market being in the end of year.

With the Fed meeting in mid-June and the market expecting a 25 basis-point hike, the Reserve Bank of Australia might follow the suit, Jennings added.

In Sydney, miners rose 1.2 per cent, with behemoths BHP Group, Rio Tinto and Fortescue Metals closing higher.

Financials rallied 1.2 per cent, with the “big four” banks closing in positive territory. Energy stocks added 0.7 per cent.

Among single stocks, AMP rose 1.9 per cent after naming Blair Vernon as its chief financial officer and saying the company would dissolve the structure of its local wealth management arm in a bid to simplify its operational model.

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Australian shares post worst week since mid-March on US debt jitters

New Zealand’s benchmark S&P/NZX 50 index rose 0.9 per cent to 11,935.65. REUTERS