Australian stocks rose sharply after falling for three consecutive sessions, as energy and banking stocks rallied as investors waited for another potential interest rate hike by the Reserve Bank to tame runaway inflation.
- On Tuesday, the RBA is expected to grant a rate increase of 0.5 percentage points
- The Dow Jones Index rose 1.1%, to 31,092, the S&P 500 gained 1.1%, to 3,825 and the Nasdaq Composite added 0.9%, to 11,128.
- Meanwhile, the pan-European STOXX 600 index was stable
The ASX 200 closed 73 points or 1.1% higher at 6,613.
Meanwhile, the Australian dollar was up, at 68.31 US cents, as of 4:15 p.m. AEST.
Financial stocks gained nearly 1%, with so-called “Big Four” banks climbing between 0.8% and 1.3%.
Investors focus on the central bank’s decision on Tuesday – with a Reuters poll predicting it will make another 0.5 percentage point (or 50 basis points) interest rate hike – marking the first time that it has raised the cash rate by this magnitude at consecutive meetings.
However, public sentiment was divided over the RBA’s hawkish stance.
A new survey of 1,000 homeowners and tenants by Canstar shows that, overall, 39% backed the RBA’s decision to raise interest rates as hard and fast as it has done recently, while 37% disagreed.
Homeowners with mortgages (46 percent) were the strongest voice against rapid rate hikes, compared to just 24 percent of people who own their homes.
And 41% of tenants felt interest rates should not rise as quickly, while 33% were unsure of the RBA’s approach.
Canstar’s Steve Mickenbecker said the struggle to balance household budgets was weighing heavily on Australians and undermining support for the rapid pace of interest rate increases.
“Home loan borrowers who are directly affected by rising interest rates are understandably more averse to increases than the community at large,” he said.
“Conversely, many baby boomers who are likely to live at least partly on interest income and fight inflation on a fixed income, lean on the positive side, with 46% of those in their 60s supporting the rapid pace and rate succession rises.
Mr Mickenbecker added that there was still a considerable proportion of savers who were against the pace of interest rate increases and who needed to take a broader view of the state of the economy and the outlook for coming.
Gold stocks rebound
On Monday, gold stocks rebounded after two consecutive weeks in the red, advancing 2.6%, with sector heavyweights Newcrest Mining and Northern Star Resources rising 2.3% and 3.7% respectively.
Mining and energy stocks followed suit, gaining 0.2% and 2.6% respectively.
Santos jumped 3.3% to $7.45 and Woodside Energy gained 2.7% to $31.26.
Tech stocks gained 1.6%, following a strong finish on Wall Street on Friday ahead of the holiday long weekend.
Tech companies such as Block (+5.1%) and Life360 (+2.5%) were among the best performers.
Link Administration said it would not recommend Canadian cloud-based software company Dye & Durham Ltd’s reduced takeover bid, but agreed to continue to engage with its suitor. Its shares were down 0.3%.
Magellan led the losses on Monday, plunging almost 10%, to $11.71, while Pointsbet fell 6.3%, to $2.70, and Pendal Group fell 2.5%, to $2.70. $4.37.
Late Wall Street Rally
The second half of the year started with gains in global equity indices on Friday, ahead of the US holiday long weekend, while the 10-year US Treasury yield fell the most since COVID-19. 19 hit the markets in March 2020.
Copper prices fell to their lowest level in 17 months.
Stocks were down at the start of the New York session, but rebounded late to end higher.
US markets were closed on Monday for the July 4 holiday.
“It’s a Friday before a long weekend, so market moves can be somewhat exaggerated,” Peter Cardillo, chief economist at Spartan Capital Securities in New York, said late last week.
Cardillo said he expected stock market performance to improve overall in the second half.
The US benchmark S&P 500 index – which on Thursday closed its worst first half since 1970 – climbed 1.1%.
The MSCI World Equity Index, which on Thursday posted its biggest percentage decline for the first half of the year since its inception in 1990, rose 0.4%.
The Dow Jones Industrial Average rose 321.83 points, or 1.05%, to 31,097.26, the S&P 500 gained 39.95 points, or 1.06%, to 3,825.33, and the Nasdaq Composite added 99.11 points, or 0.9%, to 11,127.85.
On the other side of the globe, the pan-European STOXX 600 index lost 0.02% and the MSCI gauge of stocks across the world gained 0.4%.
Oil prices soared amid supply outages in Libya and expected shutdowns in Norway, offsetting fears that an economic slowdown could dampen demand.
Brent crude oil was up slightly, trading at US$112.24 a barrel as of 4:26 p.m. AEST.
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