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Australia: Shares snap 7-day losing streak on rate cut; New Zealand surges
[BENGALURU] Australian shares ended a seven-day losing streak to close higher on Tuesday, but gains were capped as the country's top four lenders slipped following a rate cut by the central bank to cushion the economic impact of the coronavirus outbreak.
The S&P/ASX 200 index ended 0.7 per cent higher at 6,435.7 points, after shedding 10.8 per cent over the previous seven sessions in its longest losing streak since September 2018.
The Reserve Bank of Australia lowered rates to a record low of 0.5 per cent, its fourth cut in less than a year, saying the coronavirus outbreak was having a "significant" hit on the economy.
A follow-up rate cut in April is the most likely next step for the RBA, David Plank, head of Australian economics at ANZ Research, said in a note.
"It seems more likely that the trend of the epidemic's impact will become more negative in the near term, as new outbreaks spread," he wrote.
Shares of the country's "Big Four" lenders slipped after the rate cut, as it threatened their margins and added to pressure on profits.
The banks - Commonwealth Bank of Australia (CBA), Westpac Banking, National Australia Bank (NAB) and Australia and New Zealand Banking Group (ANZ) - all responded by cutting their variable home loan rates.
"While this is the right decision, pricing changes are increasingly challenging as the cash rate heads towards zero," Westpac said in a statement.
Shares of CBA and Westpac gave up nearly 2 per cent of early gains to end down, while ANZ and NAB also finished lower.
Offsetting the losses was a 1.6 per cent gain in the mining sector, as copper and iron ore prices firmed on stimulus hopes.
Global miners BHP Group and Rio Tinto added 1.9 per cent and 2.9 per cent, respectively. Fortescue Metals Group climbed 3.3 per cent, reversing from a 9 per cent tumble in the previous session.
Healthcare firms, which conduct a majority of business overseas and benefit from a weaker local dollar, ended 2.5 per cent higher.
Index heavyweight CSL and US-based Resmed rose 2.3 per cent and 5 per cent, respectively.
In New Zealand, the benchmark S&P/NZX 50 index rose 2.2 per cent to finish at 11,346.31, marking its biggest intraday climb in over three years.
The bourse had lost 8 per cent in the previous six sessions.
Financial and utilities sectors were among the top gainers, with dairy firm a2 Milk Co advancing 2.5 per cent and electricity generator Meridian Energy gaining 4.6 per cent.