Australia shares climb towards record high on rate cut hopes; NZ up

[BENGALURU] Australian shares edged towards a record high on Thursday as anticipation of global interest rate cuts buoyed financial and healthcare stocks, but heavy declines in miners limited gains.

The S&P/ASX 200 index closed up 0.6 per cent or 41.3 points at 6,818.0, a few notches below the record high of 6,851.50 reached in November 2007. The benchmark gained 0.8 per cent on Wednesday.

Disappointing manufacturing activity surveys from Europe and the United States solidified hopes the European Central Bank will ease monetary policy later in the day, and for the US Federal Reserve to lower rates next week.

Financials rose 1.1 per cent to a near 18-month closing high with the "Big Four" lenders adding between 0.8 per cent and 1.7 per cent.

National Australia Bank ended up 1 per cent to its highest level since August 2018.

Australian banks have been concerned about their margins after two rate cuts by the Reserve Bank of Australia (RBA) this year, and with more expected going ahead, but lower US rates will alleviate some of the pressure by enabling them to borrow US dollars more cheaply.

Keeping in line with the global dovish rhetoric, RBA governor Philip Lowe on Thursday said it was "reasonable" to expect an extended period of low interest rates, adding that the central bank was ready to provide further stimulus if needed.

Export-reliant health stocks advanced to an all-time high as the Australian dollar eased after Mr Lowe's speech.

Drugmaker CSL Ltd gained 2.1 per cent and medical devices developer Cochlear Ltd rose 1.5 per cent.

Energy firms rallied for a fifth straight session, as oil prices edged higher amid lingering Middle East tensions.

The metals and mining index, however, retreated 2 per cent as iron ore prices extended declines on Thursday.

The steel marking material had slumped nearly 5 per cent in the previous session after Brazil's Vale SA won approval to resume some processing operations which were halted over concerns about the stability of its dams.

Mining giants BHP Group and Rio Tinto declined 1.8 per cent and 4.2 per cent, respectively, while Fortescue Metals Group slumped 5.5 per cent.

Gold miner Northern Star Resources lost 5.5 per cent and peer Evolution Mining fell 2.2 per cent as bullion prices dipped against a stronger U.S dollar.

New Zealand's benchmark S&P/NZX 50 index closed up 0.79 per cent or 85.74 points to 10,898.28.

Westpac Bank on Thursday forecast that the Reserve Bank of New Zealand would cut rates twice this year.

Dairy product maker a2 Milk Company advanced 2.7 per cent and Fisher & Paykel Healthcare Corp was up 2 per cent.

REUTERS