You are here

Australia: Shares extend gains on rate cut hopes


[SYDNEY] Australian shares posted their best performance in nearly three weeks on Tuesday as expectations grew that the Reserve Bank of Australia would cut interest rates again later in the day.

Pressure is mounting for the RBA to follow up a February easing with another quarter point cut to an all-time low of 2.0 per cent as plunging prices for iron ore, Australia's single most valuable export earner, punish both mining profits and government tax revenue. Iron ore prices are at decade lows.

The S&P/ASX 200 index jumped 1.3 per cent, or 79.02 points, to 5,977.6 by 0119 GMT, its second straight session of gains. The benchmark rose 0.7 per cent on Thursday before the Friday through Monday Easter holiday. It has risen in six out of the last 10 sessions.

"We think they (RBA) will (cut) because the economy is not firing on all cylinders and because commodity prices continue to fall," said Chris Conway, Head of Research at Australian Stock Report.

Conway expects healthcare and banking stocks to benefit from a rate cut. "Companies with US dollar earnings will also get a boost," he said.

All sectors participated in Tuesday's rally, with banks and materials rising the most. Big banks including CBA and NAB jumped over 1 per cent.

Miner BHP was up 1.6 per cent while Rio Tinto rose nearly 1 per cent. Among healthcare shares, CSL and Ansell rose about 1.3 per cent.

Oil companies such as Woodside Petroleum, Oil Search and Santos were up 1-3.7 per cent.

New Zealand's benchmark NZX50 index was 0.4 per cent firmer at 5,855.01, its best position in a week, with support for several top stocks underpinning the market.

The market's No. 1 stock, telecommunications company Spark was 2 per cent higher, Contact Energy was up 1.5 per cent at NZ$5.99, and Auckland International Airport was 1.1 per cent higher at NZ$4.52.

Retirement village operator Summerset was up more than 3 per cent at NZ$3.43 after reporting record sales for a first quarter.

That rubbed off on rival rest home operator Metlifecare which gained 2.1 per cent to NZ$4.80, albeit on slim volumes.

Outdoor clothing and goods retailer Kathmandu was up 1.5 per cent at NZ$1.36, as bargain hunters looked to pick up the stock after it hit its lowest since July 2012, following its first half loss and an uncertain outlook.


BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to