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ASX Closes Higher as RBA Holds Rates at 0.1%

Stock MarketsDec 07, 2021 16:36
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By Oliver Gray - The ASX 200 finished 0.9% higher on Tuesday, driven by a rebound in travel stocks and big banks, as the Australian Reserve Bank board kept the official target cash rate on hold at 0.1% and confirmed the continuing purchase of government securities at the rate of $A4 billion a week until at least mid-February 2022.

Among stocks, heavyweight miners pared early losses to finish in the green, with Rio Tinto Ltd (ASX:RIO) up 1.04%, BHP Billiton Ltd (ASX:BHP) adding 1.11% and Fortescue Metals Group Ltd (ASX:FMG) up 2.22%.

Travel companies gained, with Qantas Airways Ltd (ASX:QAN) up 3.82%, Flight Centre Ltd (ASX:FLT) adding 5.57%, Webjet Ltd (ASX:WEB) up 4.32% and Sydney Airport Holdings Ltd (ASX:SYD) gaining 0.6%. Big banks also lifted on reopening hopes and higher long term bond yields, with Macquarie Group Ltd (ASX:MQG) lifting 0.17%, Commonwealth Bank Of Australia (ASX:CBA) gaining 0.4%, Australia and New Zealand Banking Group Ltd (ASX:ANZ) up 1.55%, National Australia Bank Ltd (ASX:NAB) adding 1.07% and Westpac Banking Corp (ASX:WBC) up 1.11%.

BNPL names lifted, with Zip Co Ltd (ASX:Z1P) up 9.91% after issuing its November update, announcing record transaction volumes for the month, while Afterpay Touch Group Ltd (ASX:APT) gained 2.13%.

Tech shares also finished higher, with Appen Ltd (ASX:APX) up 2.93%, Xero Ltd (ASX:XRO) adding 2.5%, Technology One Ltd (ASX:TNE) up 2.31%, and Wisetech Global Ltd (ASX:WTC) gaining 1.74%.

Meantime, Shareholders of PNG-focused oil and gas producer Oil Search voted as expected this morning with 95.1% supporting a merger with Santos. Oil Search Ltd (ASX:OSH) added 3.53%, Santos Ltd (ASX:STO) was up 2.02%, Beach Energy Ltd (ASX:BPT) gained 4.27% and Woodside Petroleum Ltd (ASX:WPL) added 1.95%.

In policy news, RBA officials held official interest rates at a record low of 0.1%, despite growing expectations in financial markets it will soon have to lift rates to deal with emerging inflation pressures. Policymakers also opted to stick with its $A4 billion-a-week government bond-buying program until February, when it will review the operation.

RBA governor Philip Lowe played down concerns about inflationary pressures across the economy, noting that “While inflation has picked up, it remains low in underlying terms. Inflation pressures are also less than they are in many other countries, not least because of the only modest wages growth in Australia.”

He also brushed off concerns about the Omicron variant.

“The emergence of the Omicron strain is a new source of uncertainty, but it is not expected to derail the recovery. The economy is expected to return to its pre-Delta path in the first half of 2022,” he said in his statement.

On the bond markets, Australia 10-Year rates were at 1.653% while United States 10-Year yields were at 1.451%.

In New Zealand, the NZX 50 was up just 0.09% to 12,610.

ASX Closes Higher as RBA Holds Rates at 0.1%

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