ASX gains after NZ cuts interest rates – 16:30 AEST Wednesday 7 Aug

Derek Rose
(Australian Associated Press)

 

The Australian share market has closed higher following two days of monster losses after being thrown a lifeline by central bankers across the Tasman.

The benchmark S&P/ASX200 closed up 41.4 points, or 0.64 per cent, to 6,519.5 points, while while the broader All Ordinaries was up 42 points, or 0.64 per cent, to 6,588.5 points.

The gains came mostly after the Reserve Bank of New Zealand cut interest rates by 50 basis points, which was double what traders had been expecting and led many to assume the Reserve Bank of Australia was more likely to cut rates next month.

“It’s not often you see the Kiwis and RBNZ moving markets but that’s what you saw today,” Pepperstone head of research Chris Weston said.

The Aussie hit a 10-year low against the US dollar following the move and bond yields flattened further while shares rose as investors sought yield, he said.

Mr Weston said the market was still jittery over what would come next following the big sell-off on Monday and Tuesday.

“We’re just trying to understand whether we’re out of the woods or we’ve got more to come at the moment,” he said.

Consumer stocks, telecoms, utilities and property trusts were all up between 1.4 and 1.6 per cent while energy share and tech stocks were the only sectors to lose ground.

Four of the top five gainers among the ASX200 were goldminers as the price of the precious metal rose 1.9 per cent to more than $2,200 an ounce against the Australian dollar, and 1.1 per cent to more than $US1,485 against the greenback.

Resolute Mining was up 8.7 per cent, Regis Resources 6.2 per cent, Northern Star 5.7 per cent and Evolution 5.5 per cent.

Overall, the materials sector was subdued, up a collective 0.2 per cent, with mining giant BHP down 0.9 per cent to $36.75 and Rio Tinto down 2.1 per cent to $89.50.

Pinnacle Investment was second-biggest gainer, up 8.4 per cent to $4.63 on top of Tuesday’s 10 per cent gains following the release of strong earnings results.

Commonwealth slid 1.4 per cent to $78.70 after Australia’s biggest bank said its full-year profit was down a worse-than-expected 4.7 per cent to $8.5 billion following a $1.2 billion royal commission-related hit.

The other big banks posted gains, with Westpac up 1.1 per cent to $28.03, ANZ rising 0.8 per cent to $26.93 and NAB up 0.7 per cent to $27.69.

Suncorp rose 4.8 per cent to $13.32 after scrapping its so-called marketplace strategy to refocus on banking and insurance.

Melbourne biotech company Opthea shares soared 120 per cent to $2.06 after it announced a positive results for its eye-injection treatment for patients with macular degeneration.

The energy sector was down as the price of crude dropped below $US60 a barrel amid continuing US-China trade tensions and worries about weakening world demand.

Woodside dropped 0.4 per cent to $32.76, Santos was down 0.8 per cent to $6.58 and Beach Energy dropped 1.6 per cent to $1.885.

Consumer stocks did well, with Woolworths gaining 2.3 per cent to $35.50 while Wesfarmers was up 2.1 per cent to $38.68.

The Australian dollar is buying 67.11 US cents, from 67.83 US cents on Tuesday.

ON THE ASX:

* The benchmark S&P/ASX200 index closed up 41.4 points, or 0.6 per cent, to 6,519.5.

* The All Ordinaries closed up 42 points, or 0.6 per cent, to 6,588.5.

* At 1630 AEST, the SPI200 futures index was up 48 points, or 0.75 per cent, to 6,438.

CURRENCY SNAPSHOT AT 1630 AEST:

One Australian dollar buys:

* 67.11 US cents, from 67.83 cents on Tuesday

* 71.34 Japanese yen, from 72.20 yen

* 59.95 euro cents, from 60.51 cents

* 55.23 British pence, from 55.79 pence

* 104.91 NZ cents, from 103.86 cents.

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