On Wednesday, the S&P/ASX 200 increased by 0.4%, reaching approximately 8,620, a new record high. This surge was fueled by optimism surrounding US–China trade discussions and the anticipation of further interest rate cuts by the Reserve Bank of Australia (RBA). Officials from both countries continued their talks into a second day in London on Tuesday, leading to an initial agreement aimed at enforcing their previous consensus reached in Geneva. Although specifics have not yet been revealed, US representatives are confident that the agreement will address rare earth trade issues effectively. Both parties are now looking for the endorsement of their leaders before proceeding with the implementation.
This buoyant market sentiment was further supported by economic indicators suggesting that the RBA is likely to lower interest rates further. Currently, the market estimates a 97% probability of a 25-basis-point cut in July, and forecasts reductions bringing the rate to about 3.1% by the end of the year. In the corporate sphere, the financial sector was at the forefront of the rally. Commonwealth Bank advanced by 0.4%, reaching a new all-time high, while NAB rose by 0.5% to a four-month peak. Among the standout performers were also mining and energy companies, with BHP Group rising by 2% and Fortescue by 1.8%.
