NZ shares gain after cenbank cuts rates; Australia dragged down by telcos
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[BENGALURU] New Zealand shares reversed course to end higher on Wednesday after the central bank cut interest rates to boost a slowing economy, while Australia fell as telcos slumped on the competition regulator's opposition to the proposed Vodafone-TPG merger.
The Reserve Bank of New Zealand lowered the official cash rate for the first time in two-and-a-half years by 25 basis points to an all-time low of 1.50 per cent.
The move, which came after a dovish pivot by the central bank in March, pushed the benchmark S&P/NZX 50 index 0.4 per cent or 35.66 points higher to 10,063.05.
The rate cut "has come as a surprise to some", said Grant Williamson, investment adviser at Hamilton Hindin Greene, adding that it put the kiwi dollar "under pressure, which is good for a number of export companies".
He added with the lower interest rates now, investors are also looking to buy higher yielding stocks.
Z Energy, which is among the stocks with the top dividend yield in the country, firmed 1 per cent, while EBOS Group strengthened to its highest since April 17.
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"The RBNZ has downgraded its near-term outlook substantially, meaning the hurdle for a further cut is high for now. As before, we expect a further OCR cut in November, with one more cut to follow early next year," Sharon Zollner, chief economist at ANZ New Zealand, said in a note.
Across the Tasman sea, the S&P/ASX 200 index slid 0.4 per cent or 26.6 points to end at 6,269.1.
Losses were dominated by telcos after Australian Competition and Consumer Commission opposed a proposed A$15 billion (S$14.3 billion) merger between TPG Telecom and Vodafone Group's Australian unit.
The decision wiped out nearly A$900 million from TPG's market value and sent its shares to their lowest since August 2018.
The gloomy sentiment also hit shares of Telstra Corporation, which dropped to a more than three-week low.
Risk sentiment in the region was also weighed down by trade tensions between the United States and China.
Energy stocks dropped to an over three-month low and were among the worst performers on the benchmark.
However, gold stocks extended gains and closed at a more than one-week peak as investors sought the safety of conservative assets.
REUTERS
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