Australian equities staged a powerful rebound on Thursday, decisively halting a three-day decline as multiple sectors surged despite mounting expectations of imminent interest rate hikes. The benchmark S&P/ASX 200 index advanced 65.80 points (0.75%) to close at 8,848.70, while the broader All Ordinaries index gained 63.90 points (0.70%) to finish at 9,172.50.
The rally unfolded against a backdrop of surprisingly strong employment data from the Australian Bureau of Statistics, which reported the national unemployment rate falling to 4.1% as 65,000 additional workers entered the workforce. This development typically signals potential inflationary pressures, prompting financial markets to fully price in at least one interest rate increase by May 2026.
Market performance demonstrated remarkable resilience with nine of eleven sectors finishing higher. Energy stocks led the charge, buoyed by Brent crude futures climbing back above US$65 per barrel. Consumer discretionary shares and major financial institutions also posted substantial gains, each rallying more than 1.80%.
The big four banks contributed significantly to the market’s upward trajectory. Commonwealth Bank rose 2.30% to $150.61, Westpac gained 2.10% to $38.91, NAB outperformed with a 3.04% surge to $42.43, and ANZ added 0.64% to $36.40.
Energy producers capitalized on geopolitical tensions and supply concerns. Woodside Energy jumped 2.89% to $24.20, Santos surged 5.28% to $6.38, and Ampol advanced 2.17% to $30.61.
Individual standouts included Premier Investments, which soared 9.87% to $14.02 following a broker upgrade from Macquarie to ‘outperform.’ DroneShield shares climbed 9.49% to $4.73 after Bell Potter raised its price target to $5 per share. A2 Milk recovered 5.44% to $8.53 after recent weakness tied to declining birth rates in China.
The materials sector provided the primary drag on markets, with BHP falling 0.83% to $48.08 and Fortescue slumping 5.12% to $21.48. Gold miners faced substantial pressure as geopolitical tensions eased, with Northern Star Resources plummeting 8.43% to $26.18.
The Australian dollar strengthened considerably, jumping 0.81% to trade at US68.07 cents. IG market analyst Tony Sycamore noted the currency’s appreciation potential, citing divergent monetary policy expectations between Australia and the United States.