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Australian stocks rose sharply on Thursday after significant gains in US markets overnight, following signals from the US Federal Reserve announcing the likely end of interest rate hikes.
In New York, the S & P 500 index jumped 2.3% to 2744, while the Dow Jones Industrial Average rose 617.7 points, or 2.5%, to 25,366, the biggest daily gain since the end of March.
Australian stocks reacted in kind. The S & P / ASX 200 index rose 0.6% to 5759.1 points at 15 hours and the All Ordinaries index rose 5837 points in the same proportion.
Indices that US interest rates should be below expectations are good news for many Australians.
Australia is an importer and exporter of goods and services, a tourist destination and a buyer and a seller of cash and financial products. This means that changes in interest rates in other countries have repercussions on the Australian economy and, ultimately, on the repayment of consumer debt and investments.
The big Australian banks use a lot of foreign debt to finance mortgages, credit cards and car loans. If debt markets become more expensive, with higher interest rates, more expensive personal loans and mortgages over time.
Economists say that the official interest rate set by the Reserve Bank of Australia will likely remain unchanged for at least next year. This is due to the slowdown in the local economy due to falling real estate prices and high household debt.
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