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Australia shares end at over 11-year high on rate cut hopes; NZ rises

Published 24/04/2019, 04:44 pm
© Reuters.  Australia shares end at over 11-year high on rate cut hopes; NZ rises
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* AU, NZ markets closed on Thursday for Anzac Day

* Weak inflation data boosts rate cut prospects

* Aussie dollar tumbles to six-week lows

* Aussie benchmark sees third straight day of gains (Updates to close)

April 24 (Reuters) - Australian shares ended at a more than 11-year high on Wednesday with banking and healthcare stocks leading gains, as weak inflation data boosted prospects of a rate cut as early as May, while New Zealand scaled a record peak.

The S&P/ASX 200 index .AXJO rose 1 percent, or 62.70 points, to 6,382.10, its highest since December 2007. The benchmark had gained 1 percent on Tuesday.

Data showed inflation slowed sharply last quarter to the lowest in three years, raising expectations for an interest rate cut, perhaps as early as May. muted figure comes after the Reserve Bank of Australia (RBA) said earlier this month that if inflation failed to accelerate as desired and unemployment were to suddenly trend higher, then rates would need to be cut from an already record low of 1.5 percent.

"Australian inflation shows no signs of coming anywhere near the central point of the RBA's 2-3 percent range, and we are biting the bullet and changing our 'on-hold' call for the RBA to a cut, possibly as early as the May 7 meeting," said ING Economics in a research note.

"...we can't now see how the RBA can ignore such a bad inflation miss, even with last week's strong employment gains."

The Australian dollar AUD=D4 tumbled to six-week lows on the tepid inflation data, helping export-oriented healthcare stocks such as drug manufacturer CSL Ltd CSL.AX end 2.4 percent higher.

The healthcare index .AXHJ saw its best day in nearly four months, gaining 2.4 percent.

Financial stocks .AXFJ continued their strong rally to end higher for a seventh consecutive session. The index rose 1.3 percent, with the "Big Four" banks gaining more than 1 percent each.

The "Big Four" banks are due to announce their earnings next week.

Elsewhere, mining and gold stocks led losses in an overall upbeat market on weak iron ore and gold prices.

As gold prices hovered around a four-month low touched in the previous session, the local gold sub-index .AXGD extended losses to a fourth straight day to close about 0.8 percent lower. GOL/

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index .NZ50 rose 0.7 percent to close at a record high of 10,071.74. The index had added 0.5 percent on Tuesday.

Heavyweights a2 Milk Company ATM.NZ and Fisher & Paykel Healthcare FPH.NZ climbed about 2.3 percent each.

Markets in Australia and New Zealand will remain shut on Thursday for Anzac Day.

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