Market in big gains on a positive outlook
The benchmark S&P/ASX 200 posted its best day since December 2011, jumping 123.7 points, or 2.6 per cent, to 4834. The broader All Ordinaries recorded its best day since October 2011, rising 120.6 points, or 2.6 per cent, to 4810.3.
The rally added about $35 billion to the market's value.
Every major sector ended the day more than 1.5 per cent higher. Long-suffering goldminers earned some reprieve, surging 6.9 per cent, while materials jumped 3.7 per cent.
The gains follow Monday's heavy losses, which saw the ASX 200 fall to its worst start to a financial year since 2009-10.
Tuesday's session started on a bright note after overnight data showed US manufacturing had rebounded to a three-month high in June.
Patersons Securities strategist Tony Farnham said the results - as well as an across-the-board jump in commodity prices - will help boost resources stocks.
Iron ore nudged up to $US116.90 ($127.20) a tonne, aiding Fortescue's 5.8 per cent push to $3.12. BHP rose 3.7 per cent to $32, while Rio Tinto pushed up 2.6 per cent to $53.
The market added to its early gains when the Reserve Bank left the cash rate steady, but said it still had scope for further rate cuts and noted the dollar could fall further.
This helped boost local shares as further falls in the Australian dollar would help many struggling domestic businesses.
IG Markets strategist Stan Shamu said the RBA expected the dollar to continue to fall, which would be positive for many sectors of the economy. "It feels the Australian dollar will depreciate further over time, which would help foster a rebalancing of growth in the economy," he said.
Mr Farnham said that while Tuesday was extremely positive, investors still faced unpredictable times. He said: "There is certainly a lot of volatility in the market, especially in the US markets."
Among the banks, ANZ and Commonwealth both jumped more than 2 per cent to $28.48 and $68.90 respectively. Westpac gained 1.6 per cent to $28.42 and NAB lifted 1 per cent to $29.26.
CIMB's Justin Gallagher said while there was strong support across the market, volumes were very thin.
Frequently Asked Questions about this Article…
The ASX soared after a mix of positive drivers: the Reserve Bank left the cash rate steady but signalled scope for further cuts, US manufacturing data rebounded to a three‑month high, and commodity prices jumped. Together these lifted the benchmark S&P/ASX 200 by 123.7 points (2.6%) — its biggest daily gain since December 2011 — and added about $35 billion in market value.
Every major sector finished more than 1.5% higher. Resource-related sectors did especially well: long‑suffering gold miners surged about 6.9% and the materials sector jumped roughly 3.7%, reflecting higher commodity prices and stronger demand signals.
The RBA left the cash rate unchanged but signalled it still had scope for further rate cuts and noted the Australian dollar was too high. That guidance that the AUD could fall further encouraged investors because a weaker local currency generally helps many domestic businesses and resource exporters, supporting share prices.
Rising iron‑ore and commodity prices boosted miners. Iron ore lifted to about US$116.90 a tonne, which helped Fortescue jump 5.8% to $3.12. BHP climbed about 3.7% to $32 and Rio Tinto rose roughly 2.6% to $53 on the day.
Major banks rallied: ANZ and Commonwealth Bank each rose more than 2% to about $28.48 and $68.90 respectively, Westpac gained 1.6% to $28.42 and NAB lifted around 1% to $29.26. Because banks make up a large portion of the ASX, their moves materially affect index performance and investor portfolios.
Comments that the AUD could fall further helped the rally. Strategists noted that a depreciating Australian dollar would be positive for many sectors — including exporters and some domestic businesses — by improving competitiveness and supporting corporate earnings in local terms.
Caution is warranted. While the day was extremely positive, market experts in the article warned of ongoing volatility and unpredictable conditions, especially given swings in US markets. Also, the rally occurred on very thin volumes, which can make sharp moves less sustainable.
Keep an eye on RBA communications about interest rates and the AUD, commodity prices (like iron ore), US economic data (such as manufacturing), and trading volumes. These factors drove the recent move and will likely influence near‑term market direction.
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