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Iron ore miners fuel gains in Australian shares
AUSTRALIAN shares firmed on Tuesday as iron ore miners surged on concerns over supply of the steel-making commodity, though the central bank's decision to leave interest rates unchanged disappointed some doves and capped gains.
The S&P/ASX 200 index closed 0.2 per cent higher at 6,295.7, having trimmed some of its previous advances. The benchmark fell 0.8 per cent on Monday.
Weighing on broader gains was the Reserve Bank of Australia's decision to keep rates unchanged, despite some speculation it would ease policy to deal with tepid inflation.
"We have probably got for the stock market the worst probable case," Nick Twidale, chief operating officer at Rakuten Securities Australia said.
Markets are now anticipating a rate cut at the next central bank meeting though the strength in the jobs market might put expectations a little bit further away and that's weighing on equities, he added.
Financials, which were in the black before the rate decision, reversed course to end at a near three-week trough and accounted for most of the losses on the benchmark.
Commonwealth Bank of Australia slipped 0.4 per cent, while Macquarie Group Ltd slid to its lowest close since Feb 18.
However, a court's decision to halt operations at a major Vale mine stoked concerns about the supply of iron ore, boosting investor appetite for Australian miners of the steel-making ingredient.
Pure iron ore play Fortescue Metals Group Ltd strengthened to an almost two-week peak and was the top performer on the benchmark.
A surge in iron ore prices due to the ramifications of Vale dam disaster and a cyclone in Western Australia in late March has boosted shares of Aussie miners this year, with Fortescue up nearly 80 percent in 2019.
Mining behemoths BHP Group Ltd and Rio Tinto Ltd on Tuesday advanced 1.4 per cent and 2.3 per cent, respectively.
Gold miners also gained as US President Donald Trump's threat to hike tariffs on Chinese imports bolstered appetite for the safe-haven metal.
Independence Group NL rose 4.3 per cent and was among the top percentage gainers on the benchmark, while Saracen Mineral Holdings Ltd climbed to a near one-month high. REUTERS