Australia: Shares climb on Federal Reserve support; New Zealand jumps

[BENGALURU] Australian shares rose on Tuesday, regaining some of the sharp losses from the previous session, as a pledge by the US Federal Reserve to spend whatever it took to stabilise the financial system lifted sentiment even though the boost may be short-lived.

The S&P/ASX 200 index advanced 2.6 per cent, or 116.7 points, to 4,657.7 by 0049 GMT. It dropped 5.6 per cent on Monday to its lowest close in more than seven years.

In its latest drastic step, the Fed said it would backstop an unprecedented range of credit for households, small and major firms to offset the disruptions caused by the virus. Purchases of US Treasury and mortgage-backed securities will also be expanded as much as needed.

"The Fed came out with unlimited quantitative easing and that is a positive in these markets. So, we are bouncing... but not sure that will hold," said Mathan Somasundaram, a market portfolio strategist at Blue Ocean Equities.

The bounce comes as the World Health Organization said the coronavirus outbreak was accelerating with more than 300,000 cases now recorded and infections reported from nearly every country.

Meanwhile, Australians started living under strict new lockdown rules from Monday as virus cases topped 1,600 and there were clear signs of economic and social stress.

"As the (global) market crashed over the last month, there will be relief bounces, but we stay cautious, continuing to advise to use these to reduce into, and keep a defensive allocation," JP Morgan analysts said in a note.

The 'Big Four' banks gained between 3.3 per cent and 4.4 per cent as the country's central bank continued to flood the financial system with liquidity.

The Reserve Bank of Australia (RBA) pumped A$6.88 billion (S$5.95 billion) into the financial system on Tuesday, well above its original intention.

Commonwealth Bank of Australia climbed the most among the four.

The gold index jumped 11.6 per cent on a surge in bullion prices, with Saracen Mineral Holdings rising 19.5 per cent in its best intraday gain in more than four years.

Tech stocks rose nearly 6 per cent. WiseTech Global and Afterpay climbed 10.1 per cent and 13.7 per cent, respectively.

In New Zealand, the benchmark S&P/NZX 50 index rose 4 per cent, or 339.4 points, to 8,838.1.

Television broadcaster SKY Network Television was the top gainer on the benchmark with a rise of 21.1 per cent, while retirement village operator Ryman Healthcare was on track for its best day ever.

Meanwhile, the country confirmed 40 new cases of coronavirus, taking the tally to 155.

REUTERS