ASX 200 Jumps 1.3% to Highest Level Since August as Wall Street Rally, Falling Bond Yields Lift Stocks

SYDNEY — Australian shares rallied strongly on Tuesday, pushing the benchmark index to its highest level in more than two months, as a rebound on Wall Street and a sharp fall in bond yields lifted rate-sensitive and cyclical stocks.

The S&P/ASX 200 was up 118.4 points, or 1.31%, at 9,148.1 at 3:10 p.m. AEDT. Earlier in the session, the index reached its highest level since late August.

MarketIndex said the ASX 200 was within 1.5% of its record high as rate-sensitive sectors rallied.

Wall Street lead

The gains followed a strong session in New York. On Monday, the ASX 200 had started the week with a small gain, rising 0.1% to 9,029.7 points. Overnight, the S&P 500 gained 2.35% and the Nasdaq 2.74%, while oil fell sharply and the dollar softened.

Futures had signaled a strong open. ASX 200 futures pointed to a rise of 1%, or 87 points, before the market opened.

Bond yields ease

Falling borrowing costs gave the market a major lift. The 10-year bond yield eased 20 basis points to 5.14% from near 15-year highs, while the 3-year swap rate cooled 12 basis points to 4.82%.

That helped property stocks. Real estate was the best-performing sector, up 2.6% and trading at a fresh three-month high.

Small caps outperform

Smaller companies led the advance. The Small Ordinaries rose 1.6% to 3,282.7, outpacing the ASX 200's gain earlier in the session. Utilities, health care and telecommunications stocks lagged as defensive sectors took a breather.

The big banks also rose. Commonwealth Bank, ANZ and Westpac were each gaining almost 2%, while National Australia Bank advanced more than 2%.

Top gainers

Mining services stocks featured prominently among the leaders. Monadelphous was the biggest gainer on the ASX 200 after guiding to first-half revenue of $1.7 billion and a strong expected result. The engineering group's shares rose 13.75% to A$32.19.

Other top gainers included SRG Global, up 5.91%; IMDEX, up 5.79%; Nickel Industries, up 5.33%; and NRW Holdings, up 5.07%.

Consumer confidence slumps

Not all news was positive. The Westpac-Melbourne Institute consumer sentiment index fell 2.7% to 78.2 in November from 80.4 in October.

The "economy, next 12 months" sub-index fell 10% to 70.3, its weakest reading since August 2020, while house price expectations fell 13.4% to 99.6, the first net negative reading since November 2022, led by a 32% drop in Queensland.

Commodities and currency

Energy stocks faced pressure. Analysts had flagged a tough session for energy producers Beach Energy and Santos after oil prices tumbled overnight, while gold miners were expected to benefit after the gold price rose again.

The Australian dollar was trading at 69.2 U.S. cents.

Regional markets

The rally extended across Asia. South Korea's KOSPI surged 4.46% to 5,242.49. Japan's Nikkei 225 was the biggest mover on the Asian board.

Investors will next watch U.S. inflation data later this week, which could shape expectations for global interest rates.