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NZ shares hit record high as central bank puts rate cut in play; Australia up

[BENGALURU] New Zealand shares rallied to a record high on Wednesday after the country's central bank stunned investors by raising the possibility of a rate cut as its next move, while in Australia the materials sector helped its market eke out modest gains.

New Zealand's benchmark S&P/NZX 50 index climbed 1.3 per cent or 124.07 points to finish the session at an all-time peak at 9698.89.

The Reserve Bank of New Zealand on Wednesday maintained its official cash rate (OCR) at a record low of 1.75 per cent, but governor Adrian Orr blindsided markets by saying that "the more likely direction of our next OCR move is down".

"The market hadn't priced in this announcement... defensive stocks, electricity companies and telecommunications companies which pay very good dividend yields are rallying post that announcement," said Jeremy Sullivan, investment adviser at Hamilton Hindin Greene.

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Renewable energy company Meridian Energy was the top gainer on the benchmark index, rising about 3 per cent to an all-time high. Telecom and digital services provider Spark New Zealand rose 3.1 per cent to a near five-week high.

The central bank cited a gloomier global outlook, particularly in major trading partners Australia, Europe, and China.

The deteriorating global outlook has shaken up financial markets around the world, with a recent sharp shift in US bond markets adding to the gloom as it signaled trouble ahead for the world's top economy.

In Australia, the S&P/ASX 200 index inched about 0.1 per cent higher at the close, fizzling out earlier in the session over global economic growth concerns.

Index heavyweight Rio Tinto rallied 1.5 per cent to its highest since September 2008, while BHP Group rose 0.75 per cent. Fortescue Metals gained nearly 2 per cent to hit a one-week high.

Most base metals gained on Wednesday, with Shanghai zinc touching a more than one-year high, as investors focused on tight inventories and the resumption of US-China trade talks.

The financial index recovered after trading much of the day lower, with National Australia Bank adding 0.5 per cent, Australia and New Zealand Banking Group up 0.4 per cent and Commonwealth Bank of Australia gaining 0.2 per cent.

Elsewhere, rare earths miner Lynas Corp Ltd rose after declaring it would not engage with conglomerate Wesfarmers on its "highly conditional" US$1.1 billion takeover approach.

Wesfarmers, which tumbled in the preceeding session following its buyout offer, traded little changed.

But gains on the benchmark were capped by healthcare stocks, with index heavyweight CSL Ltd falling nearly 1.1 per cent to a week's low.