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Australia: Shares extend rally, New Zealand stocks subdued
[SYDNEY] Australian shares scaled a near seven-year peak on Wednesday buoyed by a rally in commodity prices and an interest rate cut at home, in contrast to subdued New Zealand stocks.
The S&P/ASX 200 index rose 61.33 points or 1 per cent to 5,768.6 by 0308 GMT, having climbed as far as 5,805.1, the highest since 2008. It was on track for a 10th session of gains. "Market turnover into lunch was larger than average at A$2.181 billion.
Given the huge run we have had, it would not surprise to see some selling," said Tristan K'nell, head of trading at Quay Equities.
The benchmark is up nearly 7 per cent since the start of 2015. The latest move up was sparked by an overnight oil price rally which helped ease deflationary fears while it boosted equities.
The index had already been underpinned by Tuesday's cut in domestic interest rates to a record low of 2.25 per cent, forcing investors to search for higher-yielding assets.
Gains were across all sectors with miners, the clear outperformers. Fortescue Metals leapt 9 per cent, followed by BHP Billiton up 4 per cent and Rio Tinto up 3 per cent.
Banks extended gains, with Commonwealth Bank of Australia breaking another record high at A$91.94, the sixth time in seven sessions. Quay Equities' K'Nell warned, however, of a possible overcrowding in the sector as investors search for yield.
Shares in property owner Westfield Corp jumped to their highest in eight years after a joint venture announcement with O'Connor Capital Partners. Engineering services provider Downer EDI stocks jumped 4.8 per cent following a A$1 billion locomotive maintenance agreement with Pacific National.
Technology and telecommunications sectors, however, struggled with Telstra off 0.75 per cent, having touched a 13-year peak of A$6.73 early in the session. It has gained 11 per cent so far this year.
New Zealand's benchmark NZX 50 index was a touch higher at 5,784.14, having added 3.3 points. The index, which touched a record high of 5,820.0 last week, was capped after the Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler said he expected to keep interest rates on hold given that the economy remained strong and inflation had slowed, even as other central banks had been easing policy.
Some investors had hoped for a rate cut soon.
Telecommunications and financials companies led gains, while energy and basic materials underperformed.