Headline indices of the Australian equity market closed at their highest for 11 and a half years on Friday, 05 July 2019, thanks to gains across most sectors, as risk sentiments underpinned by easier monetary policy and recent strength in commodity prices. Market gains were, however, capped ahead of the release of the U. S. nonfarm payrolls report, which may provide clues as to whether the Federal Reserve will cut interest rates at its July monetary policy meeting. At closing bell, the benchmark S&P/ASX200 index advanced 33.28 points, or 0.5%, at 6,751.30 points, while the broader All Ordinaries rose 30.95 points, or 0.46%, at 6,831.80.
Highlights this week have included the RBA cutting rates for the second month, the Senate supporting the Government's $158bn tax plan and major oil producing nations extending supply cuts for a further nine months to March 2020.
Investors are awaiting for the release of the nonfarm payrolls report stateside later in the global day. A weaker-than-expected figure from the upcoming payrolls report could increase bets that the Fed will cut interest rates at its meeting on July 30 and 31. The central bank opened the door to easier monetary policy last month by stating it will act as appropriate to maintain the current economic expansion.
Shares of financial and real estate sectors were stronger, cheered by a lowering in borrowing costs as the Reserve Bank of Australia (RBA) cut interest rates twice in the past two months, and is expected to ease further. The lower rates are seen boosting demand for a housing market that has been hit by a lengthy downturn, with bank stocks also set to reap some of the benefits from increased home loan volumes.
The realty sector was also bolstered by the Australian prudential regulator confirming looser mortgage lending rules. Three of the country's big four banks advanced in the range of 0.1-0.7%, with Commonwealth Bank of Australia leading gains. Scentre Group and Goodman Group, the largest real estate stocks in the ASX 200, rose about 1.2% and 0.9%, respectively. Scentre was up nearly 7%, while Goodman rose 5.7%.
The materials stocks declined on profit boking on tracking a pullback in the iron ore price from a five-year high. BHP, Rio Tinto (RIO) and Fortescue Metals (FMG) were down by as much as 3%.
CURRENCY NEWS: The Australian dollar softened against the U. S. dollar on Friday. The Australian dollar changed hands at 70.24 US cents from 70.34 US cents on Thursday.
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