ASX200 bounces to record high on US rate cut hopes as major banks, telcos end in the green

The local sharemarket bounced to a new record high on Monday as investor confidence courses through markets ahead of Thursday’s widely anticipated interest rate cut in the US.

The benchmark ASX200 lifted 21.7 points, or 0.27 per cent, to close at 8121.6, while the broader All Ordinaries index climbed 17.6 points, or 0.21 per cent, to settle at 8341.1.

Tech stocks edged up 0.06 per cent to close at 3359.8.

Seven out of 11 industry sectors ended in the green, led by telecommunications and financials with a 1.08 per cent rise and a 0.95 per cent gain, respectively.

Commonwealth Bank lifted 0.95 per cent to $142.99 a share, NAB rose 1.31 per cent to $38.78, Westpac jumped 2.15 per cent to $32.79 and ANZ edged up 0.16 per cent to $31.20.

Real estate stocks also advanced, with the sector rising 0.49 per cent.

Goodman Group gained 0.71 per cent to $35.63, Scentre Group added 1.37 per cent to $3.70 and Stockland edged up 0.19 per cent to $5.27

The local bourse followed a strong lead from Wall St on Friday, which rallied on signals this week’s expected US Federal Reserve rate cut might come in at 50 basis points rather than 25bp.

“The odds of a 50bp rate cut at this week’s FOMC meeting have risen to 50 per cent, fuelled by an article quoting former New York Fed President Dudley, who argued there’s ‘a strong case for 50’ regarding the Fed’s potential move,” IG Markets analyst Tony Sycamore said.

“This view was supported by former Fed economist Sahm, who pointed to progress on inflation control and a cooling labour market as the basis for a larger aggressive cut.

“These articles followed a news report on Thursday that revealed policymakers were debating between a 25bp or 50bp cut.”

The Dow Jones jumped nearly 300 points, or 0.72 per cent, to finish at 41,393 points, the S and P 500 index lifted 0.54 per cent to 5626 and the tech-heavy Nasdaq rose 0.65 per cent to 17,683.

The big miners weighed on the local bourse as Singapore iron ore futures slipped 0.92 per cent to $91.95 a tonne.

BHP slipped 0.13 per cent to $39.55, Rio Tinto fell 0.55 per cent to $110.81 and Fortescue lost 1.77 per cent to $17.19.

Coal miners also struggled, with Whitehaven Coal shedding 1.83 per cent to $5.90 and Stanmore Resources slumping 4.64 per cent to $2.67.

In corporate news, shares in Auckland International Airport were placed in a trading halt after the company announced a $1.4bn equity raise.

The company said it would use the money to fund a capital investment program at the airline hub.

Shipbuilding company Austal Limited soared 20.54 per cent to $2.70 after announcing a US$450m contract from General Dynamics Electric Boat, an American defence firm, to expand production at its US shipyard.

“(The contract) will fund Austal USA to enhance its existing infrastructure by designing, constructing and outfitting a new module fabrication and outfitting facility at its Mobile shipyard to support the US navy goal of delivering one Columbia-class and two Virginia class submarines annually,” Austal said in a statement.

The top gainer on the ASX200 was Alcoa Corporation, which leapt 5.8 per cent to $48.89.

The largest laggard was Telix Pharmaceuticals, which tumbled 6.45 per cent to $17.82.

The Aussie dollar gained 0.34 per cent to buy US67.2c at the closing bell.