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Australia: Shares end near 3-month high as investors eye recovery

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[BENGALURU] Australian shares closed at a near three-month high on Wednesday, boosted by energy and financial stocks, as risk appetite was whetted by prospects of an economic recovery from a coronavirus-induced recession.

The S&P/ASX 200 rose 1.8 per cent to 5,941.60, gaining for a third straight session. The index is currently on a five-week winning run.

Financials added 3.4 per cent, while oil firms climbed 3 per cent to a near three-month high.

Data showed Australia's economy shrank in the March quarter and was expected to contract further in the current quarter due to virus-enforced shutdowns, leading the country's treasurer to concede that the economy was already in recession.

Effective containment of the disease, however, has helped to re-open businesses quickly, prompting the central bank to raise the possibility of a softer-than-feared economic downturn and offsetting concerns around Sino-US relations.

The benchmark is up 30 per cent since hitting a multi-year low on March 23.

"The focus is now on Q2 GDP and on the recovery," ANZ Research analysts said. "The better news on the health outcomes and earlier relaxation of restrictions suggest that the drop may not be as deep as earlier feared."

"The recovery is unlikely to be V-shaped and further stimulus will likely be required to support growth over the next year or so," they added.

The Reserve Bank of Australia on Tuesday held interest rates at a record low and left the door open for more stimulus.

Buy-now-pay-later firm Zip soared 21 per cent to an all-time high, after surging in the previous session on a deal to expand in the booming United States market.

Larger peer Afterpay, itself on a strong rally since March, advanced 5.2 per cent to a fresh record high.

In New Zealand, which could lift all virus-induced curbs next week, the S&P/NZX 50 gained 0.8 per cent to 11,118.27 and hit a near three-month peak.

REUTERS

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