Australian shares hit record high as Fed rate cut nears

Australian shares hit a record high on Tuesday, as expectations grew that the U.S. Federal Reserve could deliver a outsized rate cut this week.

The S&P/ASX 200 index XJO rose as much 0.3% to 8,148.8, as of 0110 GMT, surpassing the previous all-time high of 8,148.7 scaled on Aug. 1.

The Fed had been widely expected to lower interest rates by at least 25 basis points at the end of its two-day meeting on Wednesday. But some reports last week sparked speculation that it could deliver a 50 bp cut.

Currently, 62% of market participants expect a 50 bp rate cut, according to CME's FedWatch tool.

In Australia, traders waited for Thursday's August jobs report to see how the labour market has dealt with high interest rates.

The Australian central bank has kept interest rates steady at a 12-year high of 4.35% since November 2023.

In Sydney, rate-sensitive financials XFJ rose 0.3%, with top lender Commonwealth Bank of Australia CBA up 0.4%.

Gold stocks XGD rose for a sixth straight session, as prospects of a big cut in U.S. interest rates kept bullion prices buoyant near a record high.

Miners XXMM inched up 0.1%, with sector behemoth BHP Group BHP up 0.3%, while Rio Tinto RIO gained 0.7%.

Technology stocks XXIJ rose as much as 1% to hit an all-time high. Sector major Xero XRO climbed as much as 0.6% to hit its highest level since Jan. 4, 2022, after announcing a $70 million takeover of Johannesburg-based cloud platform Syft Analytics.

In New Zealand, the benchmark S&P/NZX 50 index NZ50G fell 0.5% to 12,641.4.