The local share market has hit a record high in morning trading after a bigger-than-expected inflation drop in the United States firmed bets that the Federal Reserve will cut interest rates in September.
At noon AEST on Friday, the benchmark S&P/ASX200 index was up 68.7 points, or 0.87 per cent, to 7,958.3, while the broader All Ordinaries was up 69.5 points, or 0.86 per cent, to 8,203.0.
The ASX200’s previous intraday record high of 7,910.5 was set on April 2.
The index was on track for a 1.7 per cent gain for a week and to set its sixth closing high for 2024, eclipsing its previous record close of 7,896.8 from March 28.
The gains came after the US Labor Department late Thursday reported a bigger-than-expected drop in inflation, which fell to 3.0 per cent in the 12 months to June, compared to 3.3 per cent in the year to May.
“The outcome suggests that the disinflationary impulse is quickly gathering momentum, supporting the case for US rate cuts in coming months,” wrote Westpac senior economist Pat Bustamante.
While a rate cut at the Fed’s end-of-month meeting is still considered unlikely, there’s now talk that the US central bank might even cut interest rates three times in 2024, in September, November and December.
Previously most analysts were predicting two cuts this year.
Every ASX sector except tech was up at midday.
The interest-rate-sensitive property sector was the biggest gainer, rising 2.1 per cent as Charter Hall climbed 6.5 per cent and Mirvac rose 4.1 per cent.
In the heavyweight mining sector, BHP was down 0.4 per cent to $43.39 after the Big Australian announced late Thursday it would temporarily suspend its WA nickel operations given falling pricing for the battery metal.
Rio Tinto and Fortescue were both up 0.4 per cent while lithium miner Pilbara had added 2.3 per cent.
Goldminers were gaining as the precious metal changed hands at near an all-time high of $US2,408 an ounce, up around $30 from Thursday on the increased prospect for US rate cuts.
All of the Big Four banks were higher, with ANZ, Westpac and CBA all up 1.1 per cent and NAB climbing 1.9 per cent.
The Australian dollar was buying 67.59 US cents, from 67.54 US cents at Wednesday’s ASX close.