Australian Shares Rebound As ASX 200 Snaps Losing Streak On Wall Street Rally And Falling Bond Yields

SYDNEY — Australian shares climbed Thursday, with the benchmark S&P/ASX 200 index on track to snap a three-day losing streak as banks and mining stocks led a broad-based rebound following a stronger session on Wall Street overnight and signs of stabilization in global bond markets.

The ASX 200 traded at 9,013.4 points, up 35 points, or 0.39%, as of 2:23 p.m. AEST, recovering some of the ground lost earlier this week when the index tumbled amid a global selloff tied to escalating Middle East tensions and surging bond yields.

The rebound followed a positive lead from U.S. markets, where the Dow Jones Industrial Average rose 0.6%, the S&P 500 gained 0.5% and the Nasdaq finished 0.5% higher. The rally on Wall Street came as U.S. Treasury yields eased slightly, with the 10-year Treasury yield slipping to 4.79%, taking some pressure off equity markets that had been rattled in recent sessions by concerns over inflation and rising borrowing costs.

Expectations for further U.S. Federal Reserve tightening also moderated. Markets were pricing in a roughly 62% to 63% probability of a 25-basis-point interest rate increase at the Fed's meeting later this month, down from about 67% a day earlier, according to interest rate futures data.

Locally, the improved sentiment came even as several ASX 200 companies traded ex-dividend Thursday morning, a factor that typically weighs mechanically on share prices. Packaging group Amcor, mining giant BHP Group, supermarket operator Coles Group, private hospital operator Ramsay Health Care and energy producer Woodside Energy Group were among the major names trading without entitlement to their most recent dividend payouts. BHP is set to pay shareholders a fully franked dividend of 139.2 cents per share on Sept. 23.

Despite the ex-dividend drag on some large-cap names, banks and miners provided the bulk of the market's upward momentum Thursday, with the long-resources, short-financials trade that has characterized much of the market's recent volatility continuing to play out in both directions depending on commodity price movements.

Energy stocks were among the session's stronger performers after oil prices extended their recent climb overnight. According to Bloomberg data, West Texas Intermediate crude rose 0.45% to $90.63 a barrel, while Brent crude gained 0.6% to $95.22 a barrel, as traders continued buying oil in response to an escalation in the ongoing conflict in the Middle East. The elevated crude prices offered support to ASX-listed energy producers Beach Energy and Santos, both of which were positioned for stronger sessions as a result.

Gold miners also found support after the precious metal's price climbed overnight. Gold futures rose 0.9% to $4,435.80 an ounce, according to CNBC data, as traders bought the metal following a pullback in both the U.S. dollar and Treasury yields. The move higher in gold prices offered a tailwind for major producers including Newmont Corporation and Northern Star Resources, both of which were tipped for a stronger session on the back of the rally.

Thursday's gains came as Australia's corporate reporting season drew to a close, with the latest earnings results painting a broadly positive picture for the market despite the recent bout of volatility. Just under half of ASX 200 companies reported better-than-expected profits during the August reporting period, with earnings beats outnumbering misses by a ratio of roughly 1.5 to 1, the strongest such result in four years, according to data compiled from the reporting season.

The benchmark index touched a record high in early August before paring some of those gains to finish the month up 1.1%, with previously beaten-down sectors including residential property developers and discretionary retailers among the standout performers. Super Retail Group was among the companies posting notable earnings growth during the period, benefiting from a rebound in consumer-facing sectors that had lagged earlier in the year.

Thursday's session also brought a steady flow of company-specific news across the resources sector. West African-focused gold explorer Many Peaks Minerals reported a high-grade intercept of 36 meters at 2.64 grams per tonne of gold from 600 meters depth at its Ouarigue project in Côte d'Ivoire, with assay results still pending from a further 27 diamond holes and 65 reverse-circulation holes ahead of an updated mineral resource estimate expected around the end of the third quarter.

Separately, Middle Island Resources reported new copper-in-soil anomalies at its Serbian exploration ground, identifying zones measuring 900 by 400 meters at its Jelaca prospect and 600 by 400 meters at Oglavak, with rock chip samples grading as high as 3.21% copper and 26 grams per tonne silver as the company continues testing the broader Priboj area for volcanogenic massive sulphide-style copper mineralization.

This week's volatility has underscored just how sensitive Australian equities remain to swings in global bond markets and geopolitical developments, particularly the ongoing conflict in the Middle East, which has driven a marked increase in average daily volatility across the ASX 200 over the past several months compared with the prior year. Analysts tracking the index's short-term correlations have noted that recent price action has been reactive and headline-driven rather than reflecting a stable underlying trend, with the market's relationship to bond yields, the Australian dollar and gold prices all shifting noticeably in recent sessions.

Despite Thursday's rebound, market watchers cautioned that downside risks remain for Australian shares in the near term, given the continued uncertainty surrounding the Federal Reserve's policy path, the trajectory of the Middle East conflict and its impact on energy markets, and the Reserve Bank of Australia's own deliberations over interest rates following recent domestic growth and inflation data. With the ASX 200 still trading below the record high it touched earlier in August, investors are likely to remain focused on how global bond yields and geopolitical developments evolve in the sessions ahead for further direction.