No fear of US rate hike as ASX rallies

SYDNEY, AAP – Australian shares rose for a second consecutive day and the Australian dollar jumped as investors tipped the Reserve Bank to follow the US Federal Reserve and increase rates.

The Australian market was more than one per cent higher on Thursday after world markets responded well to the US central bank’s modest rate hike of a quarter of a percentage point.

ASX technology shares fared best and rose four per cent. Big guns Block and WiseTech Global each improved by five per cent.

There were gains of one per cent for shares in materials, financials, industrials, consumer discretionaries and telecommunications.

The benchmark S&P/ASX200 index was up 85.4 points, or 1.19 per cent, to 7260.6 points at 1200 AEDT.

The index is down about 400 points from its record high in August last year.

The All Ordinaries index was higher by 98.2 points, or 1.32 per cent, to 7534 points.

The first US rate rise since 2018 was the main factor influencing trade.

The Federal Reserve tipped six increases and a rate of up to two per cent would be needed this year to stave off soaring inflation, which is at 40-year highs.

The Australian dollar rose to 73 US cents as foreign exchange traders tipped Australia’s central bank to also raise rates before the end of the year.

AMP head of investment strategy Shane Oliver said this would not be a result of the US hike.

He said the two nations’ rates only moved together if there were similar circumstances.

He said this happened to be the case this year as both countries recover from the pandemic.

Meanwhile, Australia’s unemployment rate fell to four per cent in February, its lowest level in more than 13 years.

The Australian Bureau of Statistics said 77,400 people joined the workforce in the month, a stronger result than had been expected by economists.

In ASX company news, James Hardie will build a manufacturing plant in Melbourne to provide fiber cement products to the region.

The company has purchased land for its third manufacturing site in Australia. No costs were given.

James Hardie was up three per cent to $46.87.

Ampol has been cleared by a New Zealand regulator to buy fuel provider Z Energy.

Ampol must sell its New Zealand Gull fuel business to make the purchase, the competition watchdog ruled.

The Australian fuel provider plans to sell Gull for $475 million to investment manager Allegro.

Z Energy has approved Ampol to buy each of its shares on the New Zealand stock exchange for $NZ3.78 each.

On the ASX, Z Energy was up 0.5 per cent to $3.49.

Ampol was higher by almost two per cent to $29.22.

In mining, Fortescue Metals was benefiting from a higher iron ore price. Its stock rose four per cent to $18.11. BHP and Rio Tinto were also higher.

Most of the banks were higher by one per cent. ANZ was best and last traded for $27.66.

The Australian dollar was buying 73.17 US cents at 1200 AEDT, higher from 72.09 US cents at Wednesday’s close.