Australia: Shares higher after Powell boosts rate cut bets; New Zealand up

[BENGALURU] Australian shares ticked up on Thursday as investors took heart from higher odds for a US rate cut this month, but gains were limited by weak banks facing tougher capital requirements and a crackdown on insurance products.

The S&P/ASX 200 index rose 0.2 per cent or 13.2 points to 6,703 by 0204 GMT. The benchmark added 0.4 per cent on Wednesday.

Federal Reserve Chairman Jerome Powell on Wednesday set the stage for a monetary policy easing later this month, pledging to act to defend an economic expansion threatened by trade disputes and a global slowdown.

"Fed chair Powell just about signed and sealed an imminent Fed cut at the semiannual monetary policy report overnight," DBS Group Research said in a note to clients.

"The first Fed cut in a decade is likely within this quarter and could come as soon as end-July," DBS added.

Gold miners soared to their highest peak in more than seven and a half years, the benchmark's best performer.

Bullion prices rose to their highest level in more than a week as the dollar fell after Mr Powell's dovish remarks.

Newcrest Mining saw its best day in three weeks, while Evolution Mining was on track for its highest ever close.

The wider mining sector also advanced, posting its sharpest gains since July 2.

Investors were also heavy buyers of energy stocks after a 4.5 per cent jump in oil prices overnight.

Santos, Australia's second biggest independent oil and gas producer, saw its best day in more than a week.

Financials lost their footing after three of the "Big Four" banks were slapped with an additional A$500 million (S$473 million) in capital requirements.

Adding to the sector's troubles, Australia's corporate regulator threatened to prosecute and ban consumer insurance products sold by some of the largest lenders because they had harmed customers.

Australia and New Zealand Banking Group fell to a more than seven-week trough and was on track for its fifth consecutive session of losses, while bigger peer Westpac Banking Corp hit its lowest since July 3.

Shares of Virgin Australia Holdings Ltd dipped 2.9 per cent after the airline said Affinity Equity Partners is seeking to exit its 35 per cent minority stake in the Velocity frequent flyer programme.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index firmed 0.3 per cent or 27.59 points to 10,677.72. The index touched a record high earlier in the session.

Dairy firm a2 Milk Company firmed as much as 2.8 per cent to its highest level since April 30.

REUTERS