Australian Stock Market Reaches New Heights

The Australian stock market has reached a new milestone, with the S&P/ASX 200 closing 0.7 per cent higher on Friday at 8,938.6 points. This not only breaks the $2.9 trillion mark but also ends the week on its highest ever note.

Record Close and Intraday Peaks

The record close follows the market hitting new intraday peaks for five straight sessions, a feat that has not been seen in the past decade. The broader all Ordinaries also lifted 0.69 per cent, to close at 9212.1. This makes it the best close for Australia’s top 500 stocks, which now have a combined value of more than $2.9 trillion.

Market Analysts’ Predictions

IG market analyst Tony Sycamore believes that the index’s fifth straight record high this week is unprecedented. He expects the ASX 200 to extend its gains towards the next upside target at 9000 in the weeks ahead, as long as it remains above support at 8630-10ish. Swissquote Bank senior analyst Ipek Ozkardeskaya also predicts a September rate cut from the US Federal Reserve, citing mounting pressure from the White House.

Economic Backdrop and Rate Cuts

Despite the uncertain economic backdrop, share markets are continuing to perform well, making new highs. AMP chief economist Shane Oliver attributes this to the decreasing likelihood of worst-case trade war scenarios, mostly okay global economic data, and stronger-than-expected profits globally. He also expects shares to benefit in the next 6 to 12 months as Trump pivots towards more market-friendly policies and central banks, including the RBA, continue to cut rates.

Future Rate Cuts and Unemployment

The recent August rate cut was no surprise, reflecting confirmation that inflation is on track to settle around the mid-point of the 2 to 3 per cent target range. Oliver believes that low unemployment and the RBA’s concerns about poor productivity growth mean that the central bank will remain cautious and gradual in cutting rates. He predicts that the RBA will cut rates again in November, February, and May, taking the cash rate down to 2.85 per cent.

Conclusion

In conclusion, the Australian stock market has reached new heights, with the S&P/ASX 200 closing at a record high. Market analysts predict further gains, citing decreasing trade war tensions, strong global economic data, and expected rate cuts. However, the RBA is expected to remain cautious in cutting rates, taking into account low unemployment and poor productivity growth. As the market continues to evolve, it will be interesting to see how these predictions play out and what the future holds for the Australian stock market.