Australian shares tracked global equities to end higher on Thursday, helped by broad-based gains across sectors, as rising expectations that the U.S. Federal Reserve will likely cut interest rates in September boosted sentiment.

The S&P/ASX 200 benchmark index closed 0.7% higher at a two-week high of 7,821.80 points. The benchmark rose 0.4% on Wednesday.

Wall street indexes surged overnight, buoyed by signals of an easing labour market after a softer-than-expected U.S. private payrolls data, which prompted traders to firm their rate-cut expectations.

Moreover, the Bank of Canada on Wednesday became the first of the G7 central banks to trim its key policy rate.

Meanwhile, Australian economic growth data for the first quarter came in weaker-than-expected on Wednesday, and helped alleviate fears of another rate hike, but a cut is still seen distant.

Henry Jennings, a senior market analysts at Marcus Today, noted the rate cut in Canada and the similarity between the Australian and Canada economies and suggested that the GDP data might bring a rate cut slightly closer.

Still too early for a rate cut from the RBA but the language may change to the dovish side of things with the economy heading down and consumers feeling the effects of high interest rate, he said.

Financials rose for the fifth straight session, adding 1% to close at an over 16-year high. Top lender Commonwealth Bank of Australia closed at a record-high level after climbing 1.1%.

Mining stocks rose 0.4% as iron ore futures ticked higher.

BHP Group rose 0.3% while Rio Tinto and Fortescue lost 0.9% and 0.3%, respectively.

Energy stocks inched higher as oil prices extended gains, and gold stocks advanced 2.2% after bullion prices rose.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index snapped a three-day winning streak to close 0.2% lower.

 

(Reporting by Sneha Kumar in Bengaluru; Editing by Nivedita Bhattacharjee)