Australia: Shares close higher on tech, financial boost
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AUSTRALIAN shares closed sharply higher on Tuesday (Oct 18), driven by gains in technology and banking stocks, after a dramatic U-turn in British fiscal policy boosted risk sentiment globally.
The S&P/ASX 200 index rose 1.7 per cent with all sectors but one closing in positive territory. The benchmark had fallen 1.4 per cent on Monday.
Investor confidence rebounded after the new British finance minister scrapped most of Prime Minister Liz Truss’ economic plan that had sent global markets on a tailspin late last month.
US stocks also closed sharply higher overnight as Bank of America’s solid quarterly results lifted optimism about the earnings season.
However, analysts believe recession fears are likely to dictate sentiment going forward, in the face of soaring price pressures.
“We are likely to face more downside in the short term, while market recovery is heavily reliant on the US Fed and they are on an elevated hike path,” said Mathan Somasundaram, chief executive officer at Deep Data Analytics.
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Financials led the gains, rising 2 per cent. The country’s “Big Four” banks advanced between 1 and 2.4 per cent.
Tech stocks tracked their Nasdaq peers higher and notched up a 4.2 per cent gain. Xero and ASX-listed shares of Block climbed 6.1 per cent and 10.8 per cent, respectively.
Energy stocks fell 0.6 per cent, with Woodside Energy and Santos losing 0.5 per cent and 0.9 per cent, respectively.
In corporate news, Rio Tinto lowered its annual iron ore shipment forecasts due to weak global demand, especially in top steel producer China. Still, its shares gained 0.1 per cent.
Meanwhile, the Reserve Bank of Australia (RBA) said it expected to raise rates in the coming months, adding that it could be on par with its global peers through smaller rate hikes.
The market will react if the RBA goes back to 50-basis point hikes, or provides a terminal rate which sets a line in the sand, said Azeem Sheriff, a market analyst at CMC Markets.
New Zealand’s benchmark S&P/NZX 50 index rose nearly 0.6 per cent to 10,847.3.
The country’s annual inflation accelerated 7.2 per cent in the third quarter, exceeding expectations and sitting just below a three-decade high. REUTERS
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