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Australia shares rally after RBA's dovish shift, NZ up
[BENGALURU] Australian shares closed higher on Thursday, basking in a policy shift by the central bank which opened the door to a possible rate cut in a boon to currency and rate-sensitive firms.
In a U-turn from a long-standing tightening bias, Reserve Bank of Australia (RBA) governor Philip Lowe used his first public speech for the year to acknowledge growing economic risks and signal that rates could move in either direction.
The Australian dollar took a hammering on the shift by the RBA, which had just a day earlier steered clear of an easing signal when holding rates at a record low 1.50 per cent for the 30th consecutive month.
Export-led stocks such as miners and yield-sensitive financials rallied, helping lift the S&P/ASX 200 index 1.1 per cent or 66.4 points to 6092.50 at the close. The Benchmark had tacked on 0.3 per cent on Wednesday.
The weaker local dollar and disruptions in iron ore supply boosted miners, with the sub-index touching its highest level in nearly 7 years during the session.
"The Aussie dollar significantly weakened... which is great news for our exporters, healthcare and commodities particularly," said Damian Rooney, director of equity sales at Argonaut.
Mining heavyweights Rio Tino and Fortescue Metals Group rose 1.3 per cent and nearly 1 per cent respectively.
"If you look at the commodity prices in terms of the local currency, we're a pretty appealing place to come shopping" he said.
Financials, which usually benefit in a low rates environment due to attractive yields, rose to their highest in nearly 3 months.
The regions biggest lender, Commonwealth Bank Of Australia rose 2 per cent, bouncing from its worst day in a month on Wednesday after its first half profits missed expectations.
Westpac Banking Corp and Australia and New Zealand Banking Group each rose over 1.5 per cent.
National Australia Bank requested a share trading halt pending a statement on "leadership changes", days after an inquiry panel called out its chairman and chief executive over misconduct in the financial sector.
New Zealand's benchmark S&P/NZX 50 index rose 0.66 per cent, or 59.79 points, to 9,133,51.
Dairy farm operator Synlait Milk was the biggest per centage gainer, rising as much as 8.5 per cent.