You are here

Australia: Shares edge up ahead of anticipated central bank rate cut

nz_ASX_011019.jpg
Australian shares edged higher on Tuesday ahead of a widely anticipated rate cut by the country's central bank, though some investors doubted it would have much impact on the market.

[BENGALURU] Australian shares edged higher on Tuesday ahead of a widely anticipated rate cut by the country's central bank, though some investors doubted it would have much impact on the market.

The S&P/ASX 200 index added 11.8 points, or 0.2 per cent to 6,7000 by 0148 GMT. The benchmark closed 0.4 per cent lower on Monday.

The Reserve Bank of Australia's decision is due at 0430 GMT.

With the policy interest already only 1.0 per cent, "easing further at today's already low rates might not work, and could backfire. But is it even necessary?," ING said in a note on Monday.

sentifi.com

Market voices on:

Damian Rooney, a director of equity sales at Argonaut, said a cut "just gives you a bit of a sugar hit... and with interest rates globally at very low levels, I am concerned about the health of the global economy."

He said it's doubtful there will be "real buying" of shares on the back of a rate cut.

On Tuesday morning, consumer discretionary and real estate stocks helped drive the benchmark higher, with retail conglomerate Wesfarmers climbing 1.3 per cent.

Real estate stocks, Boral and Adelaide Brighton rose 1.5 per cent and 1.6 per cent, respectively.

The sector also received a boost by home prices in Australia posting their biggest monthly jump in 2-1/2 years in September, a further sign that the housing market is recovering.

The largest airline, Qantas Airways, jumped 1.6 per cent amid lower oil prices.

The "Big Four" banks were all slightly lower, down between 0.1 per cent and 0.4 per cent.

Gold stocks were among the biggest drags amid a stronger US dollar, which sent prices of the metal lower.

Newcrest Mining dropped 3.6 per cent to a near three-week low, while Resolute Mining and St Barbara also slumped.

In New Zealand, the benchmark S&P/NZX 50 index was little changed at 10,924.24.

The local listing of Westpac Banking Corp and Australia and New Zealand Banking Group fell 1.2 per cent and 0.8 per cent, respectively.

Earlier in the day, the Reserve Bank of New Zealand said its final decision on a proposal to increase the amount of capital banks must hold will be announced in December.

The top Australian banks, which are the biggest lenders in New Zealand, have said they would scale back or sell their businesses in the country if the RBNZ pushes ahead with the plans.

REUTERS