Australia: Shares climb as strong GDP growth cements recovery hopes

[BENGALURU] Australian shares climbed on Wednesday after a much faster-than-expected economic growth in the final quarter of 2020 cemented hopes of a stronger recovery this year.

The S&P/ASX 200 index closed 0.8 per cent higher at 6,818, after data showed the economy accelerated 3.1 per cent in the December quarter, higher than forecasts for a 2.5 per cent rise.

A very low community transmission of Covid-19, coupled with massive and timely fiscal and monetary stimulus, has led to a strong rebound in the economy.

"The big picture is that while the initial recovery through the first half of 2021 may still be subject to air-pockets and jobs vulnerabilities linger... Australia is unambiguously on a surer path to sustained recovery," Mizuho analysts said in a note.

Reflation boost to commodities adds to tailwinds for the country's growth prospects, they added.

Mining and gold stocks rebounded sharply, both gaining more than 3 per cent on the back of an uptick in bullion, iron ore and copper prices.

Heavyweights BHP Group and Rio Tinto climbed 3.5 per cent and 2.4 per cent, respectively, while Ramelius Resources jumped nearly 14 per cent to lead gains on the benchmark.

Rio said its chairman and a board director would step down, bowing to investor pressure over the destruction of two ancient Aboriginal rock shelters for an iron ore mine last year in Western Australia.

Financials ticked up 1.2 per cent, hitting their highest in nearly a year, with the "Big Four" banks settling 1 per cent to 2.5 per cent higher.

Tech stocks fell 2.4 per cent, tracking losses in US peers overnight. Afterpay shed more than 2 per cent, while software firm Xero declined 3.3 per cent.

New Zealand's benchmark S&P/NZX 50 index gained 0.1 per cent to 12,359.26.

REUTERS