(Aug 5): Australia’s stock benchmark briefly climbed to an intraday record on easing concerns over the US-Iran conflict and supportive signals in the domestic economy.
The S&P/ASX 200 Index rose as much as 0.7% to 9,213.00, eclipsing its previous high from early March, before paring its advance. The materials sector added the biggest lift during Wednesday’s session as BHP Group and Rio Tinto Group gained, though a recent rally in banks cooled.
The renewed defensive appeal of Australia’s market has driven a rebound over the last two months. While jitters over the artificial intelligence trade have hit its Asia-Pacific peers with sharp sell-offs, Australian equities have become a harbour due to the lack of direct exposure to volatile chipmakers. Still, local stocks have only added about 5% year, while the MSCI Asia Pacific Index has soared 20%.
The benchmark gained Wednesday after optimism over a possible interim deal between Washington and Tehran tempered worries about energy supplies. US stocks closed Tuesday at an all-time high.
Recent Australian economic data has also boosted consumer-focused shares such as banks. Core inflation in the three months to June was softer than expected, prompting traders to slash bets on another interest-rate hike this year. Household spending also surged beyond estimates in June.
The spending data “has given the market fresh belief that the Australian consumer is holding up better than feared”, said Josh Gilbert, Asia Pacific and Middle East lead analyst at Etoro Ltd. This month’s corporate results serve as the benchmark’s next test, with companies pressured to “show the numbers to match the market’s confidence”.
The nation’s earnings season will gather steam next week as Commonwealth Bank of Australia reports on Wednesday and BHP follows the week after. Given the two firms’ heavy weightings in the index, “their results will do more to decide whether this record holds than anything else in August”, Gilbert said.
Investors will also be watching Tuesday’s central bank decision for clues on the outlook for stocks. The Reserve Bank is expected to keep rates unchanged.
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