Australia: Shares gain 2% as central bank trims rates, expands bond buying

[BENGALURU] Australian shares on Tuesday closed 2 per cent higher to notch their best session in nearly a month, buoyed by the central bank's decision to trim interest rates and launch quantitative easing (QE).

The S&P/ASX 200 index finished 1.9 per cent higher at 6,066.40 after marking its strongest intraday session since Oct 5. The benchmark gained 0.4 per cent in the previous session.

The Reserve Bank of Australia trimmed interest rates to near zero on Tuesday and expanded its bond-buying programme, as widely expected, a much-needed salve to aid economic recovery from the country's worst recession in a generation.

"QE is different and they are talking about 100 billion, so that will be well-received. It is not a solution, it just keeps things going in the short term," Brad Smoling, managing director at Smoling Stockbroking.

While Australia has controlled the spread of the virulent disease and opened its economy earlier than expected, domestic and international borders remain closed, business investment is weak and consumer spending is still tepid.

Australia shares also tracked major indices on Wall Street higher on the eve of the US Presidential election, with investors bracing for short-term trading turmoil and major long-term policy shifts.

Joe Biden leads in national opinion polls, but races are tight in battleground states that could tip the election to Donald Trump.

Analysts said if there is no clear winner, the outcome most likely to shake equity markets in the near term.

Domestic energy stocks were the top performers after closing 5.3 per cent higher, buoyed by a rebound in oil prices.

The Australian gold index rallied as their safe-haven appeal brightened on uncertainty surrounding the outcome of the US election and a spike in global coronavirus cases.

Financials added more than 1 per cent, with the so-called "Big Four" banks, except Westpac Banking, closing firmer.

New Zealand's benchmark S&P/NZX 50 index ended 0.5 per cent higher at 12,130.31, with Pushpay gaining 4.6 per cent and Fletcher Building adding 3.3 per cent.

REUTERS