Australia: Shares gain on prospects for global rate cuts; New Zealand up

[BENGALURU] Australian shares rose on Thursday, with the benchmark index nearing a 12-year high and the sub-index for financial stocks at its highest since March 2018 as investors expected imminent interest rate cuts in Europe and the United States.

The S&P/ASX 200 index climbed 0.4 per cent, or 23.5 points, to 6,800.20 by 0203 GMT, building on the previous day's 0.8 per cent gain.

Disappointing manufacturing activity surveys from Europe and the United States hardened expectations that the European Central Bank will cut is policy rate later in the day, and for the US Federal Reserve to cut rates next week.

Financials gained as much as 0.9 per cent to its highest since March 2018. Westpac Banking Corp rose 1.4 per cent and National Australia Bank was up 0.9 per cent.

Australian banks have been concerned about their margins after two rate cuts by the Reserve Bank of Australia this year, and with more expected going ahead, but lower US rates will alleviate some of the pressure by enabling them to borrow US dollars more cheaply.

The energy index saw limited gains as oil prices edged up after falling overnight on demand concerns.

Woodside Petroleum was up 0.2 per cent and Caltex Australia gained 0.3 per cent.

Mining stocks fell 2.3 per cent as iron ore prices fell on Wednesday after Brazil's Vale SA won approval to resume some processing operations which were halted over concerns about the stability of its dams.

Miners of the steel making material, BHP Group and Rio Tinto dropped 2.4 per cent and 4.3 per cent, respectively, while Fortescue Metals Group fell 5.4 per cent.

Fortescue in its quarterly production results on Thursday forecast stronger iron ore shipments in 2020, but also flagged higher costs as it raises output to meet demand from China.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index rose 0.59 per cent, or 61.95 points, to 10,874.49.

Westpac on Thursday forecast that the country's central bank would cut rates twice this year.

Fisher & Paykel Healthcare Corp rose 1.9 per cent and a2 Milk Co added 1.8 per cent.

REUTERS