“Australian shares managed to buck the global weakness as market expectations for an RBA rate cut rebounded and defensive or yield sensitive sectors like health, consumer staples and real estate rose strongly,” AMP Capital head of investment strategy and chief economist Shane Oliver told clients.
Those themes were evident during Friday’s trading session, with every sector on the benchmark index closing higher, led by strong gains in tech, consumer, healthcare, real estate and mining stocks.
Adding to strong gains in the previous two session, information technology jumped a further 1.6 per cent, helped by bout of buying in Afterpay Touch which soared 4.3 per cent to $32.91.
Healthcare stocks, many with a large proportion of offshore earnings, were helped higher by a weaker Aussie dollar, jumping 1.4 per cent. CSL rallied 1.9 per cent to close at a new record high of $274.74.
With Australian bond yields tumbling to multi-week lows on Thursday, REITs also enjoyed a strong day, lifting 1.4 per cent.
Both consumer discretionary and staples rose more than 1 per cent, the latter helped by GrainCorp, with its shares soaring 11.5 per cent to $8.62 after the ACCC said it would not oppose the proposed sale of its Australian bulk liquid terminals business to ANZ Terminals.
Keeping the gains in the discretionary sector in check, shares in childcare provider G8 Education were pummelled again, sliding 6.6 per cent to $1.99 after the company issued its second profit warning in three months on Thursday. It was the worst performer on the benchmark index for the second consecutive session.
Materials logged a gain of 1 per cent despite mixed moves in commodity markets, helped in part by iron ore miner strength after spot prices jumped 3 per cent overnight. Fortescue Metals led the gains, jumping 3.8 per cent to $9.06.
Across the remaining sectors, utilities added 0.9 per cent, industrials and energy 0.6 per cent, financials 0.5 per cent, while communications, with an increase of 0.4 per cent, was the relative laggard for the session.
Despite the strong performance on Friday, AMP’s Oliver cautioned that after recent strong gains, shares are now “a bit vulnerable to a pull-back” should US-China trade negotiations falter.
“The pressure on both sides to ease tensions is immense,” he said.