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Australia shares end firmer as RBA leaves door open for more rate cuts; NZ up
[BENGALURU] Australian shares rose on Tuesday, with the healthcare sector leading gains, as minutes of the central bank's September policy meeting affirmed it was open to further rate cuts, helping the benchmark index recoup earlier losses.
The S&P/ASX 200 index inched 0.3 per cent or 21.8 points higher to 6,695.30 at the close of the session, after much of the day's trading was pressured by uncertainties over tensions in the Middle East following attacks on Saudi oil facilities. The benchmark closed 0.1 per cent higher on Monday.
Minutes of the Reserve Bank of Australia's (RBA) Sept 3 meeting, released earlier in the day, showed the central bank would consider additional easing if needed to support growth and achieve its 2 per cent to 3 per cent inflation target.
Financial markets are fully priced for another rate cut to 0.75 per cent by year-end, and to 0.5 per cent by early 2020.
"The Reserve Bank conveyed a more cautious global and domestic outlook in its September Board Minutes, paving the way for a rate cut soon," NAB analyst Kaixin Owyong said.
The healthcare sector climbed over 1 per cent and was the session's best performer. Index behemoth CSL, which benefits from a weaker Aussie dollar since its has international revenue streams, climbed almost 2 per cent to a one-week high.
Attacks over the weekend on Saudi facilities led to a sharp spike in oil and fuel prices. Shane Oliver, chief economist at AMP Capital, said this could reduce consumer spending in Australian households, and would be another reason to expect further monetary easing from the RBA.
An oil-backed rally in energy stocks calmed down a little as Brent crude prices slipped about 1 per cent. Brent had surged nearly 20 per cent at one point on Monday after the attacks.
The energy subindex still managed to rise 0.7 per cent, following a 4.3 per cent jump on Monday.
Oil and Gas major Woodside Petroleum rose nearly 2 per cent, while Santos Ltd climbed nearly 1 per cent.
Financial stocks also cheered the RBA's indications, gaining 0.5 per cent at close, with three of the "Big Four" banks in positive territory.
But gains on the Australian benchmark were limited by the mining index, which ended about 1 per cent lower, hit by a fall in iron ore and steel prices after data showed a deepening slowdown in China's economy. Heavyweights BHP Group and Rio Tinto each closed about 1.5 per cent down.
New Zealand's benchmark S&P/NZX 50 index climbed 0.3 per cent or 36.28 points to finish the session at 10,868.03.
Agribusiness firm Scales Corp ended the session almost 4 per cent higher, while freight services provider Mainfreight Ltd gained about 3 per cent at close.