The Australian share market closed higher on Wednesday, 15 May 2019, as investors risk sentiments underpinned by expectations of interest rates cut by the Reserve Bank of Australia after wage growth stalled last quarter. Meanwhile buying momentum supported by U. S. President Donald Trump’s optimistic remarks that eased worries about the U. S.-China trade dispute. At closing bell, the benchmark S&P/ASX200 index rose 44.29 points, or 0.71%, at 6,284.20 points, while the broader All Ordinaries added 43.70 points, or 0.69%, at 6,370.90.
The local market rebounded as worries over US-China trade friction receded after US President Trump offered an optimistic view on the prospects for the negotiations. On Tuesday, Trump tweeted: When the time is right we will make a deal with China, adding that his respect and friendship with President Xi is unlimited.
However he also said the Federal Reserve could retaliate with cheap money in response to China’s easy monetary policy. China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing. If the Federal Reserve ever did a ‘match’ it would be game over, we win! In any event, China wants a deal! Trump tweeted.
Data from the Australian Bureau of Statistics showed the wage price index rose 0.5% in the three months ended March, unchanged from the December quarter. However, market pundits were of the view that while the wage growth data did build on the case for a rate cut, employment data would paint a more concrete picture of the labour market.
Mining stocks surged 1.4%, with the sector’s giants BHP Group and rival Rio Tinto rising 1.9% and 2.2%, respectively.
Healthcare stocks, which conduct a majority of business overseas, rallied 1.3%, with index heavyweight CSL and Cochlear each adding 1.5%.
Financial firms also rose, with Australia and New Zealand Banking Group putting on 0.7% while National Australia Bank also ticked up.
ECONOMIC NEWS: Australia Westpac Consumer Sentiment Rises In May — Australia’s consumer confidence improved in May, data from Westpac showed Wednesday. The Westpac-Melbourne Institute Index of Consumer Sentiment rose 0.6% to 101.3 in May from 100.7 in April. The indicator has held above 100 for ten of the last twelve months.
CURRENCY NEWS: The Australian dollar declined against the U. S. dollar on Wednesday, as grim data from China increased worries about the global economy, while weak domestic wage growth figures also dragged. The Aussie dollar dropped as low as $0.6922, its lowest level since 3 January 2019.
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