Australia: Shares jump on Fed's QE boost; NZ posts record daily gain

[BENGALURU] Australian shares jumped more than 4 per cent on Tuesday, bouncing back from sharp falls in the previous session as investors cheered massive support measures from the US Federal Reserve to temper the economic damage from the coronavirus pandemic.

The Fed on Monday promised unlimited asset purchases to support markets pummelled by widespread restrictions to arrest the virus outbreak, adding it will "soon" roll out credit programmes to small and medium-sized business.

The S&P/ASX 200 index gained 4.2 per cent to end at 4,735.70, recovering from a 5.6 per cent drop on Monday.

"The Fed came out with unlimited quantitative easing and that is a positive in these markets. We are bouncing... but not sure that will hold," said Mathan Somasundaram, a market portfolio strategist at Blue Ocean Equities.

Australia has imposed strict new lockdown rules as reported infections neared 2,000, with most states closing their borders to travellers from other parts of the country.

The heavyweight financials sub-index advanced 4.7 per cent, with top lender Commonwealth Bank of Australia jumping 5.1 per cent and Westpac Banking Corp gaining 2.9 per cent.

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Further boosting risk sentiment, the Reserve Bank of Australia pumped A$6.88 billion (S$5.96 billion) into the financial system through its regular repurchase agreements, more than its original intention of A$1.48 billion.

Mining stocks were among the top gainers, with heavyweight BHP Group 5.1 per cent higher. Stronger bullion prices helped gold miner Newcrest Mining gain 6.5 per cent.

Global iron ore miner Rio Tinto closed more than 1 per cent higher, recouping from a 2.3 per cent drop earlier in the session. Rio said operations at its South Africa mine will be halted and activity in Quebec, Canada will slow down due to virus-related curbs.

In New Zealand, the benchmark S&P/NZX 50 index surged 7.2 per cent to finish at 9,109.15, its biggest daily percentage gain ever. The index on Monday clocked its lowest finish since May 2018.

The country announced that retail banks would offer a six-month principal and interest payment holiday for mortgage holders and small business customers whose incomes have been affected by the economic disruption from Covid-19.

Utilities and healthcare sectors were among the top gainers, with electricity generator Mercury NZ soaring about 8 per cent, and Fisher & Paykel Healthcare Corp jumping more than 10 per cent.

REUTERS