Australian shares cheer US Fed minutes favoring slower rate-hike pace

Jan 5 (Reuters) – Australian shares rose on Thursday after minutes from the US Federal Reserve’s latest policy meeting showed that policymakers agreed over slowing down the pace of interest rate hikes, while weaker energy stocks on subdued oil prices capped gains.

The S&P/ASX 200 index rose 0.6% to 7098.7 by 2315 GMT. The benchmark ended up 1.6% on Wednesday.

Minutes from the Fed’s December policy meeting showed all officials to be in favor of slowing the pace of its hawkish rate hikes in its battle against soaring inflation, while also limiting the risks to economic growth.

Traders now see a 68.8% chance of a 25-basis point rate hike from the Fed in February, but they still see rates peaking just below 5% by June.

Reacting to the Fed minutes, bullion prices held near seven-month highs overnight, boosting Aussie gold stocks up more than 2.5% and becoming the top gainers on the benchmark.

Sector majors Newcrest Mining rose 3%, while Northern Star Resources gained 1.9%.

Financials added 1.1%, with all the “Big Four” banks trading in the positive territory.

Heavyweight banks National Australia Bank and Commonwealth Bank of Australia gained 1.5% and 0.9%, respectively.

Domestic technology stocks rose 0.8% tracking their overseas peers higher, with sector dominant ASX-listed shares of Block Inc. adding 0.5%.

Bucking the upbeat sentiment, oil stocks fell 1.7%, on track for the sub-index’s third straight session of losses, after oil prices posted their steepest loss in the first two trading days of any year for over three decades.

Sector majors Woodside Energy and Santos slid 2.3% and 1.3%, respectively.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index rose 0.7% to 11,667.22.

(Reporting by Jaskiran Singh in Bengaluru; Editing by Rashmi Aich)