Australian shares jump on US Fed rate cut signal

The local sharemarket lifted on Monday as buoyant investors cheered clear signals from the US Federal Reserve that an interest-rate cut in the world’s largest economy is coming in mid-September.

The benchmark ASX200 rose 60.6 points, or 0.76 per cent, to close at 8084.5, while the broader All Ordinaries index climbed 62.4 points, or 0.76 per cent, to 8311.5.

Tech stocks lifted 0.74 per cent to 3392.4.

The gains were broad based, with eight of 11 industry sectors ending in the green, propelled by the rate-sensitive financials sector with a 1.23 per cent lift.

Commonwealth Bank climbed 1.47 per cent to settle at $138.81 a share, while NAB advanced 2.2 per cent to $37.75, Westpac rose 2.13 per cent to $30.67 and ANZ lifted 1.26 per cent to $29.67.

The upbeat session followed a rally on Wall St on Friday, which was sparked by a dovish speech from US Fed Chairman Jerome Powell at the Jackson Hole, Wyoming symposium.

Mr Powell said the time had come “for policy to adjust” and the Fed did not “seek or welcome further cooling in labour market conditions”.

“The direction of travel is clear and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” he said.

Investors interpreted the speech to mean a near-certain cut at the Fed’s next meeting, with debate now moving to how substantial the cut will be.

“While Powell did not comment on the size or pace of the cutting cycle … there was language that opened the door for a 50 basis point cut in September,” IG markets analyst Tony Sycamore said.

“The rates market is pricing in a 75 per cent chance of a 25 basis point cut and a 25 per cent chance of a 50 basis point cut in September.”

The Dow Jones gained 462 points, or 1.14 per cent, on the news to hit 41,175 points, while the S and P 500 index added 1.15 per cent to 5634.

The tech-heavy Nasdaq jumped 1.47 per cent to 17,877.

On the local bourse, the big miners booked a positive day as Singapore iron ore futures jumped nearly 4 per cent to close in on $100 a tonne.

BHP rose 0.42 per cent to $40.84, Rio Tinto edged up 0.26 per cent to $111.02 and Fortescue advanced 1.89 per cent to $18.31.

Uranium miners skyrocketed after Kazatomprom, the world’s largest producer of uranium, warned over the weekend of depressed 2025 production.

“Kazatomprom has previously warned that if limited access to sulphuric acid continues throughout this year and should the company not succeed in catching up with the construction works schedule at the newly developed deposits in 2024, Kazatomprom’s 2025 production plan may also be affected,” the Kazakhstan company said.

Deep Yellow soared 17 per cent to $1.17 on the news, making it the benchmark’s best performer.

Boss Energy surged 7.56 per cent to $3.13 and Paladin Energy jumped 11.81 per cent to $10.88.

In corporate news, hotel and drinks retailer Endeavour Group slumped 6.87 per cent to $5.15 after reporting $512m in net profits for FY24, a 3.2 per cent dip from the prior year.

Lithium giant Pilbara Minerals gained 1.34 per cent to $3.02 despite reporting an 89 per cent dive in profits to $257m.

In FY23, the company delivered a $2.4bn profit haul.

The largest laggard on the ASX200 was bus and ferry operator Kelsian Group, which plunged 23.75 per cent to $3.82.

The Aussie dollar lost 0.32 per cent to buy US67.7c at the closing bell.