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Australian shares hit 11-year peak on fresh rate cut hopes, NZ edges down


[BENGALURU] Australian shares ended at a more-than 11-year high on Thursday as signs the US and local central banks could cut rates as soon as next month reinforced demand for stocks, although weakness in the resource sector capped broader gains.

The S&P/ASX 200 index rose 0.6 per cent, or 39.3 points, to 6,687.40 at the close of trade. The benchmark rose 1.2 per cent on Wednesday.

Global equity markets surged after the US Federal Reserve signalled possible rate cuts this year. Meanwhile, stark comments from the Reserve Bank of Australia (RBA) governor led many to believe another policy easing could occur as soon as July.

The RBA had cut its benchmark rate earlier in June citing benign economic growth, bolstering equity markets.

Financial stocks served as the biggest boost to the benchmark, with the country's big four banks closing 0.2 per cent to 0.7 per cent higher. The subindex closed up 0.8 per cent.

While an interest rate cut may hurt the margins of banks, who have been instructed to pass it on to customers in full, many believe that the easier lending rates will increase lending volumes for the banks.

Defying the bullish mood, heavyweight iron ore miners BHP Group and Rio Tinto closed 0.3 per cent and 4 per cent lower, respectively, on the prospect of lower iron ore prices in the near term.

Vale SA, the world's largest iron ore miner, dispelled concerns over a potential shortfall in iron ore supply after it flagged plans to resume operations at its Brucutu mine and reaffirmed its 2019 sales guidance.

Rio, which is the second largest stock on the ASX 200 after BHP, was the third-biggest intraday loser after it cut its guidance on volumes of iron ore it expects to ship from Australia's mineral-rich Pilbara region.

Fuel pump operator Caltex Australia and Viva Energy Group were the two largest intraday decliners on the benchmark after Caltex flagged a substantially weaker operating profit, due to a slowdown in local economic growth.

Caltex closed down more than 13 per cent, at its weakest in nearly five years, while Viva dropped 8 per cent.

New Zealand shares ended slightly weaker as the prospect of a rate cut in the country diminished with a steady showing in its first-quarter GDP.

The benchmark S&P/NZX 50 index fell 0.1 per cent, or 14.07 points, to finish the session at 10,290.76, with consumer stocks weighing the most.

A2 Milk closed about 0.8 per cent down, while casino operator Skycity Entertainment Group shed 1.1 per cent.