Australia shares end flat, mining gains offset weak financials; NZ up

[BENGALURU] Australian shares ended relatively flat on Thursday with strong gains in mining stocks offsetting losses in financials hit by the US Federal Reserve's decision to abandon further rate hikes in 2019.

Paring losses just before the bell, the S&P/ASX 200 index rose 0.03 per cent or 1.9 points to 6,167.2 at the close of trade. The benchmark slipped 0.3 per cent on Wednesday.

The Fed surprised markets by dropping all plans to raise rates this year, stoking concerns about the global growth outlook.

"The fact that they cancelled all rate hike cycles for 2019 tells you that they're seeing even weaker growth than the market expected," said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.

"If the US is struggling, the rest of the world is going to struggle even more," he added.

Financial stocks lost as much as 0.9 per cent but pared losses to end 0.3 per cent lower, tracking their US peers. US financials saw a sharp selloff in the last hour of trade after the Fed decision.

"It is going to be tough times ahead because banks are not getting higher rates," Mr Somasundaram said.

"The banks are going to struggle to get returns. Their net interest margins are already under pressure. It is only a matter of time before bad debts start to pick up," he added.

National Australia Bank lost 0.6 per cent while Macquarie Group Ltd shed 1.8 per cent.

Among fund and asset managers, AMP Ltd fell 1.4 per cent and Perpetual Ltd dropped 2.6 per cent.

The losses were offset by a 1.3 per cent jump in mining stocks.

Iron prices rose after Vale SA said it would halt operations at a mine in Brazil following an inconclusive stress test.

BHP Group and Rio Tinto rose 1.3 per cent and 1.5 per cent respectively, while Fortescue Metals Group bounced 2.6 per cent.

Energy stocks rose after oil prices hit their highest level in 2019, with gains in Woodside Petroleum and Oil Search.

New Zealand's benchmark S&P/NZX 50 index rose 0.27 per cent, or 25.61 points, to end at 9,461.31. Gaining stocks included dairy firms a2 Milk Company and Synlait Milk.

REUTERS