The Australian share market has made strong gains across the board, buoyed by signs the US may be heading for a “Goldilocks scenario” of controlling inflation while avoiding a recession.
At noon AEST on Thursday, the benchmark S&P/ASX index was up 90 points, or 1.26 per cent, to 7,225.7.
The broader All Ordinaries was up 92.1 points, or 1.25 per cent, to 7,433.6.
Wall Street jumped overnight after the release of the June consumer price index showed headline inflation in the US came down to three per cent from 5.9 per cent two months prior.
The S&P500 rose 0.7 per cent and the tech-heavy Nasdaq jumped 1.2 per cent on hopes cooling inflation could prompt the US central bank to stop hiking interest rates sooner than previously thought.
GSFM investment strategist Stephen Miller said investors are gaining confidence the Fed could successfully “thread the needle” and achieve “immaculate disinflation” – getting inflation under control without too much negative impact on activity and employment.
Despite market commentators forecasting a recession for almost 18 months, the data is beginning to show the US might narrowly avoid one, he said.
Given the size and influence of the US economy on Australia, that could have significant ripple effects for local markets.
All 11 ASX industrial sectors gained in morning trading, with real estate stocks the biggest winners – up 2.2 per cent.
Industrial property developer Goodman Group climbed 3.4 per cent while Westfield operator Scentre Group rallied 2.1 per cent.
Miners did much of the heavy lifting, rising 1.8 per cent.
BHP was up 1.3 per cent and Rio Tinto was 2.1 per cent higher.
Fortescue Metals climbed 0.8 per cent after chairman Andrew Forrest announced his separation from wife Nicola.
“After 31 years of marriage, we have made the decision to live apart,” the pair said in a statement.
“There is no impact on the operations, control or direction of Fortescue, Minderoo or Tatterang.”
Goldminers led the gains, as the weak US CPI readout sent bond yields tumbling.
Evolution Mining soared 6.9 per cent, while Northern Star was up 4.2 per cent and Newcrest 3.9 per cent.
Perseus was the ASX200’s biggest winner, surging 9.1 per cent.
IT stocks followed the Nasdaq’s lead, lifting 2 per cent on average.
Online hotel platform Siteminder booked a 5.5 per cent gain and accounting software provider Xero lifted 2.9 per cent.
The big banks stand to benefit from a lower terminal US cash rate, as they rely on much of their financing from overseas.
CBA climbed 1.1 per cent, Westpac gained 0.9 per cent, ANZ rose 0.8 per cent and NAB was 0.5 per cent higher.
Netwealth jumped 6 per cent after the superfund platform announced a 26 per cent jump in funds under administration to $70 billion.
Alliance Aviation soared 13.8 per cent after the plane chartering business said underlying profit for the last financial year will exceed guidance, due to a lift in flying activity in the first half of 2023.
Whitehaven Coal was a rare loser, down two per cent.