Markets rally on 2024 US rate cut hopes
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The news: The Australian sharemarket rallied on Thursday, after dovish rhetoric from the US Federal Reserve fuelled hopes of rate cuts in 2024. The benchmark ASX 200 gained 1.65% to 7,377.90, with all 11 sectors finishing in the green. Interest rate sensitive stocks like real estate (+4.2%) and IT stocks (+2.9%) performed best. The improved outlook for global liquidity also helped boost non-US currencies, gold, oil and other commodities as demand expectations strengthened.
The numbers: The US dollar fell against major currencies, lifting the Aussie to above 67 US cents for the first time since the beginning of August. Lithium miners and explorers surged as the commodity's price rebounded after months of declines, after nearly 200 nations agreed to begin phasing out fossil fuels at the COP28 climate conference. Core Lithium jumped 10.2%, while Allkem, Liontown, Sayona Mining and Pilbara Minerals all gained more than 8%. Gold miners also rallied. Oil prices improved on stronger demand expectations and a bigger than expected reserve drawdown in the US. Brent crude rose 0.3% to USD74.49 a barrel while West Texas gained 0.2% to USD69.58 a barrel.
The context: The European Union, Switzerland and the United Kingdom central banks will deliver key rates decisions overnight tonight. NAB will hold its AGM tomorrow morning, and industrial production data from China will follow in the afternoon.
