The index of the top 200 Australian shares was higher on Thursday and is approaching a breakout.
AUS 200 – Daily Chart
The index is currently in a range, and a strong move on Thursday can set up a move to 8,813. A move above that level could start a strong new trend. The ultimate target is the previous high at 9,100, set in October.
Mining stocks continue to support the market, with aluminium, iron ore, nickel, copper, and other base metals rising on commodity demand and a weak U.S. dollar. A surge in healthcare and technology stocks also helped lift the Australian market, despite weaker Asian stocks due to tensions between China and Japan.
Continued demand from top export partner China helped iron ore prices, while copper saw another high after a strike at Capstone Copper’s Chilean mine. The Australian market could receive additional support if the Chinese authorities decide to implement further stimulus measures this year.
GDP growth was higher due to surging investment in AI data centres, alongside rising household spending on essentials and rent. National accounts showed real GDP expanded by 2.1% in the year, up from 2% in June. However, the quarterly pace of growth was only 0.4%, lower than analysts’ expectations for a 0.7% rate.
As with the U.S. economy, data centre spending contributes to GDP, but that spending does not translate into benefits for the average citizen. The rise of AI could also negatively affect jobs, and the underlying growth is not as strong as expected.
However, the Australian share market can still benefit from the commodity price boom.
