Australian stocks shrug off rate hike concerns to end three-day slide

Australia’s sharemarket snapped a three-day losing streak on Thursday, despite a surge in employment lifting expectations of a rate hike in February.

The benchmark ASX 200 climbed 65.80 points or 0.75 per cent to 8,848.70 and the broader All Ordinaries rallied 63.90 points or 0.70 per cent to 9.172.50.

The Aussie dollar jumped 0.81 per cent and was buying 68.07.

Australia’s dollar moved higher and the ASX slipped from 8864.5 points following the release of Australia’s unemployment rate.

According to the Australian Bureau of Statistics the national unemployment rate fell to 4.1 per cent, surprising markets as 65,000 workers found a job.

Rising employment is considered a bad sign for interest rates because it could drive up inflation.

In Australia the bond market has now fully priced in at least one interest rate hike by May, while in the US there are expectations of two interest rate cuts by the end of the year.

IG market analyst Tony Sycamore said Australia’s dollar could appreciate against the greenback due to the divergence on interest rates in 2026.

“Against that backdrop of our central bank hiking rates and the US Federal Reserve cutting them, it can really only mean one thing for the Aussie dollar,” he told NewsWire.

“It is a good story for the Aussie dollar. You can’t find any good reason to sell the Aussie, only reasons to buy it and that is usually a pretty good indication there is no real reason for it to fall away.”

Despite an increased likelihood of interest rate hikes over the next four months, nine of the 11 sectors still traded higher with energy, consumer discretionary and the major banks leading the way.

Energy stocks rallied overnight as the price of Brent oil futures lifted back above $US65 ($95) a barrel.

Commonwealth Bank head of commodities and sustainability Vivek Dhar says oil prices continued to run higher on global tensions ease in Europe as well as rise in the Middle-East.

“US President Trump said a ‘framework’ for a deal on Greenland had been reached,” he said.

“But oil markets are still on edge on the possibility of a direct US‑Iran confrontation on reports that Trump is seeking ‘decisive’ military options.”

Shares in Woodside Energy jumped 2.89 per cent to $24.20, Santo surged 5.28 per cent to $6.38 and Ampol moved 2.17 per cent higher to $30.61.

Also helping to lift the market was a rise in the big four as Commonwealth Bank rallied 2.30 per cent to $150.61, Westpac rallied 2.10 per cent to $38.91, NAB outperformed up 3.04 per cent to $42.43 and ANZ added 0.64 per cent to $36.40.

Weighing on the markets were the materials sector as BHP fell 0.83 per cent to $48.08 and Fortescue slumped 5.12 per cent to $21.48.

Gold miners also traded heavily in the red on easing geopolitical tensions led by Northern Star Resources, which slumped 8.43 per cent to $26.18, Evolution Mining dropped 4.60 per cent to $14.11 and Newmont Corporation fell 4.91 per cent to $171.92.

In company news, Premier Investments were the top performing on the ASX 200 on Thursday after it rallied 9.87 per cent to $14.02 on a fresh broker note from Macquarie upgraded their recommendation to “outperform”.

DroneShield shares also soared 9.49 per cent to $4.73 after Bell Potter lifted its price target to $5 per share.

A2Milk recovered 5.44 per cent to $8.53 on Thursday following shares dropping more than 10 per cent throughout the week on a slumping birthrate in China.