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Iluka Resources was one of the strongest performers, rising 8.6 per cent, as rare earths miners backed in the government’s plan to underwrite supply, and talk of a potential price floor sent stocks soaring. Lynas shares jumped 5.2 per cent while Arafura Rare Earths – whose Nolans project in the Northern Territory has already received more than $1 billion in government investment – rocketed 8.6 per cent.
Setting a taxpayer-guaranteed minimum price for rare earths sold by Australian miners would be “well worth a look at”, Resources Minister Madeleine King said at the Diggers and Dealers mining forum at Kalgoorlie.
Gold prices edged to within 2 per cent of record prices to $US3435 ($5312), helping support miners. Newmont Corporation (up 4.1 per cent), Ramelius Resources (up 3.9 per cent) and Northern star (up 1 per cent) all gained.
Energy stocks were mostly higher, with Woodside adding 1.4 per cent and Santos up 0.3 per cent, while Ampol shed 0.2 per cent. Oil prices slid overnight as traders took stock of OPEC+’s latest bumper supply increase while Trump vowed to penalise India for buying Russian crude, mitigating some fears about a glut.
Telix Pharmaceuticals was the biggest loser, sinking 8.5 per cent after it announced significantly higher operating expenses in the first half. Nueren Pharmaceuticals also had a poor day, falling 2 per cent. Endeavour Group, an outlier in the stronger consumer sectors, was down 8.5 per cent. TPG Telecom, bucked the stronger day for tech stocks, finishing down 0.4 per cent.
The lowdown
Australia’s sharemarket has posted its best-ever close as confidence around company earnings and future interest rate cuts washed out global growth concerns.
The prospect of cheaper US and Australian borrowing costs helped interest rate-sensitive sectors such as financials, real estate, technology and consumer discretionary stocks lead all 11 segments higher.
On top of this, Australia’s prospect as a market where investors could weather uncertainty elsewhere was likely growing, Pepperstone head of research Chris Weston said.
“We’ve got a very, very stable banking sector with excellent liquidity, so you’re looking for a safe harbour in this kind of area, I think Australia ticks the right boxes,” he said.
“Now, you’re not going to get a huge amount of foreign investments looking at Australia, because you do have a scarcity of incredibly liquid assets.”
Tuesday’s performance showed investors weren’t worried about taking on risk heading into earnings season, Weston said.
The record day followed Wall Street’s best session since May, as last week’s gloomy jobs figures helped narrow interest rate market bets on coming Federal Reserve rate cuts.
“Investors reversed their brief market retreat into a bull run overnight, applauding strong company data and cheering weaker economic data as a herald of interest rate cuts to come,” Moomoo market strategist Michael McCarthy said.
“Good news is good news, and bad news is good news as US indices moved back towards all-time highs.”
Overnight, US stocks rallied and won back most of their sharp loss from last week, when worries about how US President Donald Trump’s tariffs may be punishing the economy sent a shudder through Wall Street.
Traders are increasingly pricing in interest rate cuts by the Federal Reserve after Friday’s weak jobs report, which dragged down stocks and sent bond prices sharply higher. Equities have rebounded sharply from their April lows, driven by growing optimism that corporate America can absorb the impact from tariffs and the US economy will be able to avoid a recession.
“It looks like today everyone is following the upward trend in US stocks,” said Hiroshi Namioka, chief strategist at T&D Asset Management. “It’s a bumpy road, and investors are still mindful of the possibility of a recession. But signs of growth, particularly in US tech stocks, are helping sentiment.”
After the jobs data on Friday, the markets were implying a roughly 80 per cent chance of a rate cut at the next Fed meeting. Following last night’s trade, those odds have increased to nearly 95 per cent, wrote Kyle Rodda, a senior market analyst at Capital.com in Melbourne.
There’s a “99 per cent chance” that the Fed will cut rates by 25 basis points in September, Rachana Mehta, a regional fixed income co-head at Maybank Asset Management said in a Bloomberg TV interview.
The pressure is on US companies to deliver bigger profits after their stock prices shot to record after record recently. The jump in stock prices from a low point in April raised criticism that the broad market had become too expensive.
Stocks are coming off their worst week since May not so much because of that criticism but because of worries that Trump’s tariffs may be hitting the US economy following a longer wait than some economists had expected. Job growth slowed sharply last month, and the unemployment rate worsened to 4.2 per cent.
Trump reacted to Friday’s disappointing jobs numbers by firing the person in charge of compiling them. He also continued his criticism of the Federal Reserve, which could lower interest rates to pump adrenaline into the economy.
The Fed has instead been keeping rates steady this year, in part because lower rates can send inflation higher, and Trump’s tariffs may increase prices for US households.
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This coming week may feature fewer fireworks following last week’s jobs report and profit updates from some of Wall Street’s most influential companies. This week’s highlights will likely include earnings reports from Disney, McDonald’s and Caterpillar, along with updates on US business activity.
With AAP, AP, Bloomberg
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