Australian stocks finished at an unprecedented peak on Friday, fueled largely by financial stocks which are sensitive to interest rates.
The trend was a response to growing investor confidence in the potential easing of monetary policy following predictions of rate cuts by the U.S.
Federal Reserve within the coming year.
The S&P/ASX 200 index increased by 1.1%, settling at 7,847.00 after reaching a record high of 7,853.10 earlier that day.
This marked the second record peak for the index in just one week.
Slower-than-anticipated GDP growth data for Australia in the last quarter of the year indicated that the central bank is likely to initiate rate cuts sometime within the next 12 months.
Fed Chair Jerome Powell assured U.S.
lawmakers on Wednesday that forthcoming interest rate cuts should only be anticipated if there is further evidence of falling inflation.
Market analysts, like IG Markets' Hebe Chen, are listening to the growing chorus for a pivotal shift in monetary policy, and they see potential advantages for key players in the financial sector in the next wave of tailwinds.
The ‘big four’ banks saw gains ranging from 1.7% to 2.6%, propelling financials to rise by 2% and reach a 16-year high.
Among them, Commonwealth Bank of Australia reached a historic summit after a 1.8% gain, marking its highest ever closing level.
Meanwhile, National Australia Bank enjoyed a 2.3% raise, which elevated it to nearly a nine-year high.
The healthcare sector also increased by 1.3%, driven largely by biotech giant CSL, which similarly saw a 1.3% uplift.
The energy index experienced a 1% surge as Brent prices climbed.
Major entities in the oil and gas sector, Woodside Energy and Santos, went up by 1.7% and 0.6% respectively.
Additionally, Ramelius Resources grew by 1% following the gold miner’s confirmatory discussions with Karora Resources over a potential acquisition.
Finally, New Zealand’s S&P/NZX 50 index rose by 1%, closing at 11,923.72.
Commonwealth Bank of Australia is a leading banking institution providing a variety of financial services, ranging from banking and fund management to insurance, investment and broking services.