Source : THE AGE NEWS
The Australian sharemarket powered ahead on Wednesday after a report showed the nation’s economy grew less than expected last quarter, boosting optimism for an interest rate reprieve from the Reserve Bank.
The S&P/ASX 200 finished up 61.3 points, or 0.7 per cent, at 8785.70, with seven of its 11 industry sectors in the green, led by materials. Energy stocks gained as oil climbed for a third day on doubts the US and Iran are close to reaching a peace deal as fresh fighting flared up in the Middle East. The Australian dollar slipped 0.3 per cent to US71.56¢.
Gross domestic product advanced 0.3 per cent in the first three months of the year, the Australian Bureau of Statistics said. That’s about one-third of the pace recorded in the final quarter of 2025 and below economist forecasts, as households hunkered down in the face of higher fuel costs and rate rises. The economy’s 2.5 per cent annual expansion also fell short of forecasts.
The slowdown sparked expectations that the RBA will pause its rate rises at its June 15-16 meeting, having delivered three consecutive hikes to take the cash rate to 4.35 per cent as it tries to rein in inflationary pressures.
“The print confirms our view that the economy is cooling fast enough, and the labour market is starting to feel it. So the RBA’s next move is wait-and-watch, not another hike,” said Sunny Nguyen, head of Australia Economics at Moody’s Analytics. “The next meeting is almost certainly a hold.”
Sharemarkets don’t like rate hikes as they increase borrowing costs for consumers and businesses, which can curtail demand and hurt company profits.
A gauge of demand for Australian government bonds due in seven years surged at auction after the GDP report as investors increasingly bet the RBA is close to ending its rate-hike campaign. Investors sought more than four times the $1 billion of notes maturing in November 2033 on offer, according to data from the Australian Office of Financial Management. The bid-to-cover ratio was the highest for a seven-year bond sale since the same maturity was auctioned in November last year.
Mining stocks jumped higher, with BHP up 2.4 per cent, and Rio Tinto up 1.6 per cent, although Fortescue dropped 1.8 per cent. Northern Star continued to surge, jumping 3.2. It is the second straight day of strong gains for the gold miner, which soared by 13.6 per cent on Tuesday after activist investor Elliott Management revealed it built a $1 billion-plus stake in the company and urged it to put itself up for sale. Evolution Mining was up 0.6 per cent. South 32, which owns Australia’s biggest silver mine, climbed 1.9 per cent.
Energy stocks advanced as Brent oil climbed toward $US97 a barrel, while West Texas Intermediate was near $US95 after adding more than 7 per cent in the week’s first two sessions. Israel is continuing attacks on Lebanon, jeopardising fragile, long-running negotiations between Washington and Tehran. The delay in a Middle East resolution is raising concerns that the world will need to tap crude inventories further as it waits for Persian Gulf exports to fully resume.
“With Middle East production likely not returning to pre-war levels until October-November at the earliest”, global inventories will fall by 800 million barrels, TD Securities commodity analysts including Bart Melek said in a note. “As such, we see Brent crude averaging $US104 a barrel in the second half of the year, with a risk of prices spiking above $US150 due to regional scarcities.”
Woodside Energy was up 0.1 per cent and Santos added 0.8 per cent in early trade. Ampol rose 3.4 per cent after the refiner announced it had received approval from the competition watchdog for its acquisition of EG Group Australia, having agreed to sell off 41 of its petrol stations to Metro Petroleum. Viva Energy gained 4.7 per cent.
Financial stocks also advanced, with Commonwealth Bank up 1.1 per cent, Westpac up 0.7 per cent, National Australia Bank up 0.6 per cent and ANZ up 1.9 per cent.
The big supermarket chains Woolworths (up 2 per cent) and Coles (up 1.1 per cent) did well, while investors sold down discretionary retailers such as JB Hi-Fi (down 3 per cent) and Harvey Norman (down 2.2 per cent) in light of the weaker-than-expected economy. Spending on essentials rose by 0.8 per cent last quarter, but discretionary expenditure rose by just 0.1 per cent, the ABS said.
Gourmet food company Maggie Beer Holdings shot up 6 per cent after revealing a $10 million non-binding offer for its ailing Hampers and Gifts Australia business from an unidentified multinational buyer. It had bought the business in 2021 for $40 million, wanting to rely on it for future growth.
Tech stocks retreated after their surge on Tuesdays, with Xero down 3.5 per cent and WiseTech falling 2.1 per cent. AI data centre operator NEXTDC climbed 4.1 per cent as the GDP report showed the economy has been propped up by a massive surge in investment into data centres in the March quarter.
Overnight on Wall Street, the S&P 500 rose 0.1 per cent after drifting between small gains and losses through the day. The Dow Jones added 228 points, or 0.4 per cent, and the Nasdaq composite edged up by less than 0.1 per cent. All three set all-time highs.
