The Santa rally arrived in earnest on the Australian stock exchange as the share market rose the most in almost three weeks on Friday.
A continuing rise in gold stocks and strong gains in miners happened as investors jumped aboard the US interest cuts train, hoping that it was creating a rising market tide that would lift all boats.
More than 100 points in a day
By the close of trade, the ASX 200 index had risen 105.30 points, or 1.2%, to 8697.30 points, taking the total gain for the week to 0.7%.
With only 12 trading days this year, the Australian share market looks set for a strong finish to the year after experiencing the third consecutive rise for the index and its best weekly run since August.
Miners take the lead
The big miners continued their strong run with shares in iron ore giants BHP (ASX: BHP) and Fortescue (ASX: FMG) both up 1.1% while Rio Tinto (ASX: RIO) leapt an impressive 2.5%.
Gold miners were stronger still, with Northern Star (ASX: NST) up 2.9%, Evolution Mining (ASX: EVN) jumped 4.2% and Newmont (ASX: NEM) leapt 5.7% after spot gold prices hit an amazing $US4280 an ounce.
Gold and copper producer Greatland Resources (ASX: GGP) rose an amazing 9.9% and was the best performed large-cap company.
Banks impress
On the opposite side of the traditional ASX investing dumbbell the banks were also rising nicely with all four large banks ending higher.
Commonwealth Bank (ASX: CBA) led the pack with a 2.1% rise, National Australia Bank shares (ASX: NAB) jumped 1.8%, Westpac (ASX: WBC) rose by 1.4% and ANZ Bank (ASX: ANZ) advanced by 1.2%.
That result was even more impressive on the back of news that previous ANZ boss Shayne Elliott was suing the bank after it stripped him of $13.5 million in bonuses.
There were some weak points on the market with oil stocks falling on the back of lower crude prices, with Santos (ASX: STO) down 0.5% and gas giant Woodside (ASX: WDS) down a small 0.08%.
Some technology stocks were also weaker on the back of a big 10.8% tumble by US company Oracle after it revealed massive new spending on developing AI.
TechnologyOne (ASX: TNE) fell 1.6%, Xero (ASX: XRO) fell by 0.5% but overall it was a strong day on the market as the big points gain suggests and with the US Santa rally seemingly intact, it would not surprise if things head higher still from here on before the Christmas break.
The week ahead
We are in for an interesting week in Australia with the expected release of the 2025-26 Mid-Year Economic and Fiscal Outlook (MYEFO).
In general Treasurer Jim Chalmers has been able to point to positive fiscal news for Budget releases and this time will be no exception, with the deficit expected to come in at around $32 billion compared with the March projections of $42 billion.
Nevertheless, there is no getting away from the fact that after a string of surprise Budget surpluses we are heading for a time when the red ink will start to appear and there is no obvious new source of revenue to balance the books.
More Central bank divergence expected
Central banks will also hog the limelight with some more official rate divergence on the cards.
The European Central Bank (ECB) meets on Thursday and is widely seen as likely to hold rates at 2.00% while the Bank of England (BOE) is expected to cut rates by a quarter point to 3.75% on the same day.
The UK Government’s budget measures are seen as being unlikely to promote higher inflation, giving the BOE a window to cut a little.
Perhaps heading in the opposite direction will be the Bank of Japan (BOJ) which is expected to raise its official rates from 0.5% to 0.75% after Governor Kazuo Ueda flagged a tightening in a recent speech.
There are some other things to watch for, with a jobs report and inflation numbers out in the US and a monthly update on retail spending, industrial production and fixed asset investment for November due in China.
The US nonfarm payroll figures are expected to produce about 60,000 extra jobs and a slight rise in the unemployment rate while consumer prices (CPI) are expected to be around 3% annually - in other words, still well above the target zone set by the US Federal Reserve.
