The S&P/ASX 200 is within striking distance of its March 2022 record as easing oil costs and earnings optimism lift heavyweight sectors. Traders see a catch-up trade.
Australia's benchmark equity index is charging toward a fresh all-time high, with banks and miners leading the charge.
The S&P/ASX 200 closed within 0.3% of the March 2022 record of 7,628 on Tuesday. Mining stocks drove the advance as Brent crude slid from above $90 a barrel to the mid-$80s, lowering input costs for producers and trimming transport expenses across the supply chain. BHP Group and Rio Tinto posted gains. Fortescue Metals Group also rose. The energy sector lagged. Woodside and Santos fell as lower crude prices squeezed revenue.
The big four lenders pushed higher. Commonwealth Bank, Westpac, NAB and ANZ all rose, with CBA setting a new closing high. Investors are betting the upcoming earnings season will show resilient margins and solid loan growth despite 13 rate hikes from the Reserve Bank.
The rally comes as global risk sentiment improved after the oil price drop. Lower crude has helped contain inflation expectations, reinforcing the view that central banks may be nearing the end of their tightening cycles. That backdrop has been especially supportive for rate-sensitive sectors like banks and miners.
Traders described the move as a catch-up trade. Banks and miners had underperformed tech and healthcare earlier this year, they said. The earnings story is strong and oil is helping.
The ASX 200 has rallied more than 5% from its October low. A break above 7,628 would open the way to the next resistance level near 7,700, technical analysts said. The first batch of bank earnings, due in the first week of November, will be the immediate catalyst.
The market is betting that lower input costs and a solid earnings season will sustain the momentum. The first bank earnings are due November 1.
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