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Australian shares advanced this week, supported by strong performances in banking and real estate sectors, while investors awaited key inflation data expected to guide the Reserve Bank of Australia's (RBA) next interest rate decision. The S&P/ASX 200 index increased by 0.6% to 9,070.50 points after closing slightly lower last week. Gains in major banks and property firms helped offset declines in the energy sector. Investors also looked to upcoming US Federal Reserve policy developments following recent signs of easing inflation in the United States.
Australia's share market recorded modest gains this week, driven mainly by strength in financial and real estate stocks. The S&P/ASX 200 index rose 0.6% to 9,070.50 points, recovering from a 0.2% decline in the previous session. The upward move reflected improved investor sentiment ahead of the release of the country's third-quarter inflation data, which is expected to influence the Reserve Bank of Australia's monetary policy outlook. Advertisement
Banking stocks were among the major gainers, with the financial sub-index climbing 1.1%. The "Big Four" banks - Commonwealth Bank of Australia, Westpac, National Australia Bank, and ANZ - rose between 0.8% and 1.3%. Investors expect that any potential interest rate reduction could stimulate borrowing and mortgage demand, which would likely support credit growth and profitability for banks.
The real estate sub-index also strengthened by 0.5%, supported by gains in property developers and investment firms. Goodman Group led the advance with a 1% increase. Market participants believe lower borrowing costs could enhance demand for housing and commercial properties, further supporting the sector.
Meanwhile, technology stocks moved in line with Wall Street's performance from the previous session. The tech sub-index rose 0.8%, with accounting software firm Xero and logistics software company WiseTech Global advancing 0.1% and 0.4%, respectively. The sector's rise mirrored broader optimism in global markets, where investor confidence improved after easing inflation signals in the United States.
In contrast, energy stocks posted slight losses as global oil prices weakened. The energy sub-index declined 0.2%, pressured by doubts regarding the US administration's enforcement of sanctions on Russia's two largest oil exporters. Energy major Woodside slipped 0.3% in response to the fall in oil prices.
Investors are now closely watching the upcoming inflation figures, which are expected to offer clues about whether the Reserve Bank of Australia will reduce its cash rate from 3.60% in the next policy meeting. Earlier this month, RBA Governor Michele Bullock had indicated that higher costs in home building and market services might have kept core inflation slightly above earlier expectations in the third quarter.
Globally, attention remains on the US Federal Reserve, where policymakers are widely expected to consider a 25-basis-point rate cut after last week's softer-than-anticipated inflation data. A shift in US monetary policy could influence investor sentiment worldwide, including in Australia, through changes in capital flows and currency trends.
In neighbouring New Zealand, the benchmark S&P/NZX 50 index edged up 0.1% to 13,391.59 points, reflecting a generally positive tone across regional markets.
Source Reuters
5th Jun, 2025
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