Investors follow lead from Wall Street
The benchmark S&P/ASX 200 Index rose 38.3 points, or 0.78 per cent, to 4921, while the broader All Ordinaries was up 37.9 points, or 0.77 per cent, at 4940.5.
On Wall Street on Tuesday, the Dow Jones rose 0.7 per cent to 13,979.30 points, following data showing the US services sector continued to expand in January.
Local data released on Wednesday showed that retail spending in Australia had fallen for three consecutive months, a sign that rising unemployment was weighing on consumer confidence.
Retail trade was down 0.2 per cent in December, seasonally adjusted, well below expectations of 0.3 per cent rise for the month.
"I think we've basically followed on from the sentiment in the US," CMC Markets analyst Ric Spooner said. "Retail sales figures here [in Australia] were weak, but in a phase where the market wants to be optimistic, I think that's being parlayed into optimism on the increasing prospect of a rate cut."
Among the major banks, NAB advanced 32¢ to $28.11, Westpac climbed 21¢ to $28.13, ANZ gained 39¢ at $27.03, and Commonwealth Bank rose 33¢ to $64.63.
In the resources sector, global miner BHP Billiton firmed 34¢ at $37.52 as it met workers in Adelaide to announce some redundancies as part of efforts to slash costs. Rio Tinto picked up 75¢ at $68.08.
Among other stocks, medical centre owner Primary Health Care was steady at $4.49 as it lifted its first-half profit by 50 per cent and forecast a rise in full-year earnings of up to 8 per cent. Online real estate advertiser REA Group was 71¢ higher at $21.71 after it lifted its first-half profit by 25 per cent.
Streetwear company Globe International was untraded at 45¢ as its directors were re-elected at a board spill meeting in Melbourne.
Meanwhile, three-year bond futures prices rose after the weak retail trade figures left scope for more interest rate cuts.
The March three-year bond futures contract was at 97.16 (2.84 per cent), up from 97.15 (2.85 per cent). The 10-year contract was trading at 96.5 (implying a yield of 3.5 per cent), down from 96.53 (3.47 per cent).
CMC Markets strategist Michael McCarthy said local bond markets reacted sharply to the retail spending data.
"I'd be very surprised if the Reserve Bank took that as game-changing evidence for the need for a rate cut, but I note that the market has," Mr McCarthy said.
"There's clearly still a focus on that potential for a rate cut and that's got the short-end [three-year bonds] a little bit concerned."
Mr McCarthy said 10-year bond futures prices rose on the back of better growth prospects as the global economy improves.
Frequently Asked Questions about this Article…
The local sharemarket rose after a positive lead from Wall Street and growing expectations of an interest rate cut. The S&P/ASX 200 gained 38.3 points to 4,921 and the All Ordinaries was up 37.9 points to 4,940.5, as investors reacted to US data and softer local economic indicators.
Wall Street's gains—led by a 0.7% rise in the Dow to 13,979.30 after US services sector expansion—helped lift Australian stocks. Analysts said local sentiment followed the US lead, encouraging optimism despite weaker domestic retail figures.
Australian retail trade fell 0.2% in December (seasonally adjusted), marking three consecutive monthly declines and missing expectations of a 0.3% rise. That weakness suggests rising unemployment is weighing on consumer confidence and has increased market talk about the potential for interest rate cuts.
Major banks rose: NAB +32c to $28.11, Westpac +21c to $28.13, ANZ +39c to $27.03 and Commonwealth Bank +33c to $64.63. The gains were driven by overall market optimism—partly linked to rate-cut hopes—rather than bank-specific news in the article.
Global miner BHP Billiton firmed 34c to $37.52 as it met workers in Adelaide to announce redundancies aimed at slashing costs, while Rio Tinto picked up 75c to $68.08. Those moves reflect investor attention on cost-cutting and commodity-sector fundamentals.
Primary Health Care reported a 50% lift in first‑half profit and forecast full‑year earnings growth of up to 8%; its shares were steady at $4.49. REA Group lifted first‑half profit by 25% and rose 71c to $21.71. Streetwear company Globe International was untraded at 45c after directors were re‑elected at a board spill meeting.
Three‑year bond futures rose to 97.16 (implying about a 2.84% yield) and 10‑year futures traded at 96.5 (about a 3.5% yield). The market reaction to weak retail spending increased focus on the potential for rate cuts, particularly at the short end of the curve, according to market strategists quoted in the article.
The article suggests markets are pricing in a greater chance of rate cuts, but a CMC Markets strategist said he would be surprised if the Reserve Bank took the retail figures as game‑changing evidence for an immediate cut. In short, the data has raised expectations, but it doesn't guarantee an RBA rate cut on its own.
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