ASX surges to record on rate cut hopes

The Australian sharemarket rallied to a fresh all-time high as a surprise uptick in the unemployment rate to 4.3 per cent fuelled expectations of a potential interest rate cut by the Reserve Bank of Australia next month. The S&P/ASX 200 Index (ASX: XJO) jumped 0.9 per cent to close at a new peak of 8639, recovering from Wednesday’s sharp loss and surpassing Tuesday’s record. All 11 sectors rose, led by strong performances from property and financial stocks, which are typically sensitive to interest rate changes. The All Ordinaries Index (ASX: XAO) also added 0.8 per cent.

Financials, property, and technology rally

Market optimism grew as bond traders increased the probability of a rate cut at the Reserve Bank’s August 12 meeting to 94 per cent. The three-year government bond yield dropped 5 basis points to 3.45 per cent, while the Australian dollar declined to US64.83¢. Major banks, which had lagged on Wednesday, led gains with Commonwealth Bank of Australia (ASX: CBA) climbing 1.8 per cent, and Westpac Banking Corporation (ASX: WBC), Australia and New Zealand Banking Group Limited (ASX: ANZ), and National Australia Bank Limited (ASX: NAB) each rising over 1 per cent. Property stocks including Mirvac Group (ASX: MGR) and Scentre Group (ASX: SCG) also rallied. Tech names such as Block Inc (ASX: SQ2) and Xero Limited (ASX: XRO)performed strongly, while lithium producers like Pilbara Minerals Limited (ASX: PLS) also posted solid gains.

Global markets lift on economic data and tech strength

On Wall Street, both the S&P 500 Index (NYSE: SPX) and Nasdaq Composite Index (NASDAQ: IXIC) reached new record highs, driven by robust retail sales and falling jobless claims. Tech stocks led the rally after Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) issued a positive outlook that bolstered sentiment in AI-related investments. Comments from San Francisco Federal Reserve President Mary Daly indicated potential for two rate cuts this year, while Federal Reserve Governor Adriana Kugler urged caution due to inflation concerns. Meanwhile, President Donald Trump moved to impose new tariffs ranging from 20 to 40 per cent on over 20 trade partners. In corporate developments, United Airlines Holdings Inc (NASDAQ: UAL)forecast a more predictable second half of 2025, and Chevron Corporation (NYSE: CVX) signalled increased cash flow as it nears peak production in the Permian Basin.