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Australia shares end up on rate cut prospects; NZ hits new peak

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[BENGALURU] Australian shares rebounded on Wednesday, with the broader market underpinned by expectations that interest rates may be cut while a fall in the Aussie boosted miners.

Expectations the Reserve Bank of Australia will cut interest rates soon were raised after wage growth stalled last quarter.

The S&P/ASX 200 index rose 0.7 per cent or 44.3 points to 6,284.20 at the close of trade. The benchmark fell 0.9 per cent on Tuesday.

Data from the Australian Bureau of Statistics showed the wage price index rose 0.5 per cent in the three months ended March, unchanged from the December quarter.

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However, analysts were of the view that while the wage growth data did build on the case for a rate cut, employment data would paint a more concrete picture of the labour market.

"Does it throw further fuel on the rate cut fire? It does. But it is not the smoking gun for rate cuts by any shape or form," said Chris Weston, head of research at Pepperstone brokerage.

"The RBA has said that the smoking gun to cut rates is the labour market. If we do see that breaking down, and there are signs that that could be the case... one could say that the chance of a June cut could rise," Mr Weston added.

Economists are now focusing on the April jobs report due on Thursday, where the unemployment rate is seen ticking up to 5.1 per cent from 5.0 per cent now.

The prospect of a rate cut and disappointing data from China led investors to dump the Australian dollar sending it to a 4-1/2-month trough, which prompted a strong rally among export-oriented stocks such as miners and healthcare.

Mining stocks surged 1.4 per cent, with the sector's giants BHP Group and rival Rio Tinto rising 1.9 per cent and 2.2 per cent, respectively.

Even gold stocks cut their losses from early in the session, ending only marginally lower. Top miner Newcrest Mining rose 0.4 per cent while Saracen Mineral Holdings gained 1.3 per cent.

Healthcare stocks, which conduct a majority of business overseas, rallied 1.3 per cent, with index heavyweight CSL and Cochlear each adding 1.5 per cent.

Financial firms also rose, with Australia and New Zealand Banking Group putting on 0.7 per cent while National Australia Bank also ticked up.

New Zealand's benchmark S&P/NZX 50 index rose 0.6 per cent or 61.23 points to finish the session at 10,131.58. Earlier in the session, the index hit a record high.

Fletcher Building was among top gainers, rising 2.4 per cent, while dairy giant a2 Milk Company jumped 2.6 per cent.

 

REUTERS