The share market has opened higher on growing expectations of a Reserve Bank interest rate cut.
Early gains of 1.3 per cent followed a strong session on Wall Street overnight, as the US central bank’s Federal Open Market Committee said the labour market needed to improve before it raised the federal funds rate.
The Australian dollar also roser against the US dollar, which has lifted expectations of a rate cut by the RBA in the coming months.
“The Fed’s very dovish tone has certainly moved expectations on the idea of rate cuts for Australia,” IG Markets strategist Evan Lucas said.
“We’ve got a 100 per cent chance of getting a rate cut by May, and now a 50 per cent chance by April – which yesterday was at 30 per cent and 82 per cent.”
All areas of the market opened higher, and Mr Lucas said high yielding stocks such as the banks, Telstra, CSL and major supermarket operators were set to drive the market’s strength.
“We are now back within the idea of making 6,000 points in the next couple of weeks to maybe a month,” he said.
Commonwealth Bank was up $1.19 at $94.58, National Australia Bank had gained 48 cents to $38.86, ANZ had jumped 47 cents to $36.39 and Westpac was 61 cents stronger at $39.29.
CSL had surged $1.53 higher to $95.15 and Telstra was nine cents stronger at $6.39.
BHP Billiton was up 36 cents at $30.56 and Rio Tinto had gained 29 cents to $58.51, while Fortescue Metals was down half a cent at $1.86.
Myer shares have been hammered after a 23 per cent slide in half year profit and a downgrade to its full year guidance, shedding 12 cents, or 7.8 per cent, to $1.41.
“Richard Umbers the new CEO has got a hell of a job to make Myer relevant – it has a real identity crisis problem,” Mr Lucas said.
Fellow retailer Oroton had plunged 16 cents, or 5.9 per cent, to $2.55, after a 57 per cent plunge in half year profit.
KEY FACTS
* At 1030 AEDT on Thursday, the benchmark S&P/ASX200 index was up 78.3 points, or 1.34 per cent, at 5,920.6 points.
* The broader All Ordinaries index was up 75.7 points, or 1.3 per cent, at 5,883.7.
* The March share price index futures contract was 46 points higher at 5,899 with 12,962 contracts traded.
* National turnover was 702 million securities worth $2.9 billion.
