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Australia shares end up on rate cut prospects; NZ hits new peak

Published 15/05/2019, 04:53 pm
© Reuters.  Australia shares end up on rate cut prospects; NZ hits new peak
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* Wage growth stagnates, raises RBA rate cut expectation

* Miners end at 3-week high as Aussie dollar slumps

* Healthcare and miners propel index after subdued early trade

* NZ index hits record high during session (Updates to close)

By Rashmi Ashok

May 15 (Reuters) - Australian shares rebounded on Wednesday, with the broader market underpinned by expectations that interest rates may be cut while a fall in the Aussie boosted miners.

Expectations the Reserve Bank of Australia will cut interest rates soon were raised after wage growth stalled last quarter.

The S&P/ASX 200 index .AXJO rose 0.7% or 44.3 points to 6,284.20 at the close of trade. The benchmark fell 0.9% on Tuesday.

Data from the Australian Bureau of Statistics showed the wage price index rose 0.5% in the three months ended March, unchanged from the December quarter. analysts were of the view that while the wage growth data did build on the case for a rate cut, employment data would paint a more concrete picture of the labour market.

"Does it throw further fuel on the rate cut fire? It does. But it is not the smoking gun for rate cuts by any shape or form," said Chris Weston, head of research at Pepperstone brokerage.

"The RBA has said that the smoking gun to cut rates is the labour market. If we do see that breaking down, and there are signs that that could be the case...one could say that the chance of a June cut could rise," Weston added.

Economists are now focusing on the April jobs report due on Thursday, where the unemployment rate is seen ticking up to 5.1% from 5.0% now.

The prospect of a rate cut and disappointing data from China led investors to dump the Australian dollar AUD=D4 sending it to a 4-1/2-month trough, which prompted a strong rally among export-oriented stocks such as miners and healthcare. stocks .AXMM surged 1.4%, with the sector's giants BHP Group BHP.AX and rival Rio Tinto (LON:RIO) RIO.AX rising 1.9% and 2.2%, respectively.

Even gold stocks .AXGD cut their losses from early in the session, ending only marginally lower. Top miner Newcrest Mining NCM.AX rose 0.4% while Saracen Mineral Holdings SAR.AX gained 1.3%.

Healthcare stocks .AXHJ , which conduct a majority of business overseas, rallied 1.3%, with index heavyweight CSL CSL.AX and Cochlear COH.AX each adding 1.5%.

Financial firms .AXFJ also rose, with Australia and New Zealand Banking Group ANZ.AX putting on 0.7% while National Australia Bank NAB.AX also ticked up.

New Zealand's benchmark S&P/NZX 50 index .NZ50 rose 0.6% or 61.23 points to finish the session at 10,131.58. Earlier in the session, the index hit a record high.

Fletcher Building FBU.NZ was among top gainers, rising 2.4%, while dairy giant a2 Milk Company ATM.NZ jumped 2.6%.

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