Australia’s benchmark share index, the S&P/ASX 200, achieved a notable milestone on Thursday, rising by 0.7 percent to reach a record intraday high of 9,059 points. This marks the index’s fourth consecutive day of gains, as investors largely overlooked escalating trade tensions between the United States and China. Concurrently, gold prices soared to an unprecedented high of $4,227 ($6,514 AUD), reflecting a shift in investor behavior as they sought safer assets amidst volatile market conditions.
Investor confidence appeared resilient despite geopolitical uncertainties. The rise in the share market was bolstered by significant contributions from banks, mining companies, and data centre businesses linked to artificial intelligence. Thursday’s gains accelerated following the release of employment data indicating a rise in the jobless rate to 4.5 percent in August, surpassing expectations of 4.3 percent. This development prompted speculation regarding a potential interest rate cut by the Reserve Bank of Australia (RBA) on November 7, 2023, coinciding with the Melbourne Cup Day.
The Australian economics team at HSBC stated, “Today’s (jobs) print bolsters the case for an RBA cut in November (our central case), but whether it does will depend on if the Q3 CPI (September quarter inflation data) is low enough on October 29.”
Damien Klassen, founder and Chief Investment Officer of Nucleus Wealth, remarked that the record high reflects a sentiment among share market investors that negative news related to employment does not equate to selling pressure. “In Australia, it’s almost like bad news is good news as people think interest rates will go down,” said Klassen. Nonetheless, he expressed concern that Australian shares are generally overvalued, with the exception of the resources sector, and cautioned that the market is not prepared for potential downturns in Chinese economic growth.
In a significant business move, Macquarie Group announced a $60 billion deal to sell its US-based Aligned Data Centre assets to a group backed by Nvidia. Following this news, Macquarie’s shares increased by 5 percent to $228.10. The market’s most valuable entity, Commonwealth Bank, also saw a rise of 1.4 percent to $168.62.
The standout performer in the market on Thursday was AMP, a bank and asset management firm, which surged by 9 percent to $1.93 per share after reporting strong inflows into its platforms business. Gold mining companies continued to dominate the ASX leaderboard, with Newmont and Northern Star reporting gains of 4 percent and 1.9 percent, respectively.
As the market navigates these dynamic conditions, the interplay between economic indicators and investor sentiment remains a critical focus for analysts and market participants alike.
