Australian shares rose on Wednesday, driven by gains in the mining sector and buoyed by Federal Reserve Chair Jerome Powell's moderately dovish comments, hinting at a potential easing cycle later this year.
The S&P/ASX 200 index (XJO) climbed 0.15% to 7,729.70 points by, recovering from a 0.4% decline in the previous session.
Powell's Impact
On Tuesday, Powell indicated that the U.S. is on a "disinflationary path," but emphasized the need for further progress before any policy changes. Following his remarks, market participants' expectations for a rate cut at the Federal Reserve's September meeting rose to over 61%, up from 59.8% the previous day, according to the CME FedWatch tool.
Sector Performances
- Mining Stocks: The mining sector saw a 0.6% increase, supported by rising global iron ore prices. BHP Group (ASX: ASX:BHP) advanced 0.2%, while Rio Tinto (ASX: ASX:RIO) slipped 0.2%.
- Financials: Financial stocks (XFJ) snapped a two-day losing streak, gaining up to 0.5%. The 'Big Four' banks each rose between 0.3% and 0.7%.
- Energy Stocks: Despite a fall in global oil prices as concerns over Hurricane Beryl's impact on supply diminished, energy stocks (XEJ) gained 0.4%, marking a seventh consecutive session of gains. Woodside Energy (ASX: WDS) rose 0.3%, and Santos (ASX: STO) added 0.5%.
- Healthcare and IT Stocks: Healthcare shares (XHJ) traded flat, while IT stocks gained 0.3%, ending a two-day losing streak and mirroring gains in their U.S. counterparts.
- Real Estate Stocks: Real estate stocks (XRE) increased by 0.3% on the day.
Across the Tasman Sea
New Zealand's benchmark S&P/NZX 50 index (.NZ50) also rose 0.2% in early trade.
In summary, Australian shares benefitted from a combination of Powell's dovish tone and sector-specific gains, particularly in mining and financials, offsetting broader market uncertainties.