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Australian shares saw a turnaround on Wednesday as the financials sector rallied, helping the S&P/ASX200 eke out a 0.1% gain, closing at 7733.5. The broader All Ordinaries also added two points to reach 7990.3.
The late rally in energy and utilities stocks played a pivotal role in negating early losses and driving the market into positive territory. The positive performance came on the back of fresh GDP numbers released by the Australian Bureau of Statistics, revealing a 0.2% expansion in the economy for the December quarter, aligning with consensus forecasts.
Sean Langcake, the head of macroeconomic forecasting at Oxford Economics, commented on the economic landscape, stating, “The Australian economy is in the midst of a cyclical low point, with policy settings and fast inflation curbing growth.”
Adding to the positive sentiment, the Australian dollar strengthened against the greenback, buying US65.19c. The financials sector’s resurgence offset sharp declines in tech stocks, reflecting a broader market sentiment. The rebound in the Australian market mirrored a similar trajectory in New York following Federal Reserve boss Jerome Powell’s affirmation of a potential pivot to rate cuts later in 2024. With the Nasdaq closing up 0.6%, Australian shares are expected to rise, tracking the positive performance in the US market.
The energy and utilities sectors, along with the financials, real estate investment trusts, and consumer discretionary sectors, registered gains by the end of the day, contributing to the market’s overall positive closure. Though some big-name tech stocks are facing challenges on Wall Street, the Australian market showcased resilience and momentum, powered by a late surge in specific sectors.
As oil extended gains, nearing yearly highs, and gold hit a record high of $US2160.55 an ounce, market dynamics displayed signs of optimism and strength. The Australian dollar also climbed to buy US65.7¢, further reinforcing positive market sentiment.
In summary, the Australian sharemarket’s rebound, led by the financials sector, illustrates the market’s ability to navigate through challenges and stage a turnaround, despite global economic uncertainties and sector-specific pressures. The resilience displayed by specific sectors in the market highlights the diverse dynamics at play and the potential for future growth amidst the prevailing economic landscape.
