You are here

Australia: Shares rise on expectations for a rate cut on Tuesday

Thursday, April 2, 2015 - 11:36
AUSREUTERS0606.jpg

[SYDNEY] Australian shares rose on Thursday as investors shrugged off a fall on from Wall Street and bought bank stocks amid growing expectations of a rate cut within days.

The Reserve Bank of Australia is expected to announce its second rate cut of 2015 when it meets on Tuesday, the next trading day after markets close for the Easter weekend. A cut would encourage more people to get loans. "The market is pricing in an expectation of a 70 per cent chance of a rate cut next week, and that is why a lot of people are repositioning themselves in the banks," said IG Markets strategist Evan Lucas.

By 0132 GMT, the S&P/ASX 200 index was up 45.0 points or 0.8 per cent at 5905.5, reversing the previous day's fall. That compared to a weaker close on Wall Street, where investors braced for disappointing jobs data to be released on Friday.

Banks led the gains, with lending majors Commonwealth Bank of Australia, Australia and New Zealand Banking Group and National Australia Bank all up about 1 per cent.

QBE Insurance Group jumped 4 per cent after saying it is considering increasing its dividends.

Energy stocks advanced after the oil price rebounded from recent weakness overnight. Origin Energy added nearly 2 per cent and Oil Search rose 1.3 per cent while Woodside Petroleum firmed 0.5 per cent.

Iron ore miners fared worse after the spot price of the key steelmaking ingredient slumped to fresh multi-year lows overnight. Rio Tinto declined 1.3 per cent and rival BHP Billiton eased 0.5 per cent, while Fortescue Metals Group dropped 3 per cent.

Mining products maker Bradken leapt more than 20 per cent after media reports said it received a takeover offer from private equity firm Pacific Equity Partners. But the stock retreated to be up 11 per cent after Bradken said the offer was too low to consider.

New Zealand's benchmark NZX50 index was 0.3 per cent weaker at 5,816.41, hovering just above a five-week low amid softness in power and dairy-related stocks.

The market's number three stock Contact Energy was 1 per cent lower while Meridian Energy was down 3 per cent as its shareholders face having to pay the final instalment for the part-paid shares.

The sharp fall in prices in the latest global dairy auction cast a shadow over Synlait Milk down 2 per cent, and A-2 Milk, which has just listed on the Australian bourse, down 5.2 per cent, while the Fonterra Shareholders Fund was marginally lower.

REUTERS