Australia: Shares rise sharply on RBA injection; New Zealand recovers

[BENGALURU] Australian shares climbed nearly 5 per cent on Tuesday, a day after posting their biggest fall since 1987, as the central bank injected cash well above its original target to avert a liquidity crunch and shore up lending.

The S&P/ASX 200 index rose as much as 4.8 per cent in its biggest intraday gain since November 2008 and was up 2.9 per cent, or 143.10 points, at 5,145.100 by 0208 GMT. On Monday, it slumped 9.7 per cent.

The Reserve Bank of Australia pumped A$8.8 billion (S$7.65 billion) into the banking system, well above its original intention of A$2.06 billion.

"The RBA injection is the main reason why there is some topside recovery today," said Nick Twidale, director & co-founder at brokerage X-chainge.

"But we're still going to see plenty of volatility as everyone comes to grip with the coronavirus saga."

On Monday, the central bank said it would announce more policy steps this week as global policymakers look to soften the damaging impact of the epidemic.

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"Contributing to this de-risking will be the additional actions the RBA takes at its 'special' meeting on Thursday," ANZ Research analysts said in a note.

The RBA is likely to cut to the effective lower bound, where a central bank lowers short-term interest rates to zero, and unveil quantitative easing, ANZ Research analysts added.

Financials advanced 1.2 per cent, with the "Big Four" banks trading in positive territory. Commonwealth Bank of Australia and National Australia Bank gained 8.1 per cent and 5 per cent, respectively.

Heavyweight global miners BHP Group and Rio Tinto jumped 9.2 per cent and 6.8 per cent, respectively.

Gold stocks surged more than 8 per cent after six straight sessions of declines. Northern Star Resources soared 17.6 per cent and was among the best performers on the ASX benchmark, while Saracen Mineral Holdings jumped 15.5 per cent.

Among losers, Qantas Airways fell 2.3 per cent after the flagship carrier slashed international capacity by around 90 per cent, citing new restrictions on arrivals in Australia.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index rebounded from early falls to rise 0.5 per cent, or 43.94 points, to 9,520.88.

The government said it would pump NZ$12.1 billion (S$10.4 billion) into the economy to slow a contraction expected from the coronavirus outbreak.

Movie software maker Vista Group tumbled 13.8 per cent to its lowest since October 2014, while payments platform operator Pushpay Holdings slipped 10.3 per cent.

REUTERS