The Australian sharemarket pared an earlier rally after strong employment data smashed expectations and increased the odds that the Reserve Bank of Australia will raise interest rates again.

The S&P/ASX 200 Index rose 16 points, or by 0.2 per cent, to 8839, having rallied more than 1.1 per cent earlier in the day to an intraday high of 8926.30 – its best since mid-June.

Investors trimmed gains after the data showed 76,000 jobs were created in June – well above consensus expectations of 15,000. The unemployment rate held at 4.4 per cent.

Markets are now pricing in a 36 per cent chance of an RBA rate rise in August, and are fully priced for a move higher by the end of the year, taking the cash rate to 4.6 per cent.

“Today’s evidence of still bountiful employment growth – albeit possibly supply-driven – will keep the RBA on edge about possible wages pressures and firmer consumer spending,” Betashares chief economist David Bassanese said.

On the ASX, five of the 11 sectors finished higher, led by materials. James Hardie jumped 6.1 per cent to $36.99 after the company upgraded its quarterly sales guidance to between $US1.449 billion and $US1.475 billion ($2.11 billion) for the three months through June.

Mining stocks also rallied as gold traded around $US4116 an ounce and iron ore futures climbed 1.7 per cent to $US98.70 in Singapore. BHP rallied 1.5 per cent to $60.63, Fortescue by 1 per cent to $18.76 and gold producer Northern Star rose 2 per cent to $20.74.

Energy stocks were also supported by a 2.3 per cent rise in the oil price to $US96.24 a barrel, taking total gains this month to around 30 per cent, after Iran-backed Houthi militants said they had attacked two Saudi Arabian tankers in the Red Sea.

Woodside Energy added 0.5 per cent to $31.80 and Karoon Energy 3.5 per cent to $1.61 after it generated $US116.4 million in sales revenue during the June quarter from production of 1.08 million barrels of oil equivalent.

Banks cooled a strong rally before the job data was released. In the end, National Australia Bank rose 1.4 per cent to $39.81, Westpac by 0.8 per cent to $36.64, ANZ by 0.6 per cent to $35.96, and Commonwealth Bank added 0.4 per cent to $172.30.

Technology was the weakest performer after Google parent Alphabet reported earnings that disappointed the market. The shares fell 4 per cent in after-hours New York trading. Xero dropped 5 per cent to $64.45, WiseTech Global by 7 per cent to $31.48 and TechnologyOne by 3.7 per cent to $28.21.

Stocks in focus

In company news, Macquarie Group fell 0.5 per cent to $253.75 after chief executive Shemara Wikramanayake announced she would retire in November. The board appointed the head of banking and financial services, Greg Ward, as her successor.

Generation Development Group soared 37.1 per cent to $4.58 after the wealth platform reported record quarterly sales and a 36 per cent increase in funds under management to $46.4 billion over FY26.

Sandfire Resources rallied 3.6 per cent to $19.36 as it finished the 2026 fiscal year with record quarterly revenue, stronger copper-equivalent production and a $353 million net cash position after a strong June quarter lifted its full-year performance.

Santos was flat at $7.85 as it narrowed its 2026 production guidance to a range of 99 million to 105 million barrels of oil equivalent while its Barossa and Pikka projects ramp up after commissioning delays.