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March 27 (Reuters) - 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 .NZ50 climbed 1.3 percent 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 percent, but governor Adrian Orr blindsided markets by saying that "the more likely direction of our next OCR move is down." 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 advisor at Hamilton Hindin Greene.
Renewable energy company Meridian Energy MEL.NZ was the top gainer on the benchmark index, rising about 3 percent to an all-time high. Telecom and digital services provider Spark New Zealand SPK.NZ rose 3.1 percent 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 U.S. 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 .AXJO inched about 0.1 percent higher at the close, fizzling out earlier in the session over global economic growth concerns.
Index heavyweight Rio Tinto (LON:RIO) RIO.AX rallied 1.5 percent to its highest since September 2008, while BHP Group BHP.AX rose 0.75 percent. Fortescue Metals FMG.AX gained nearly 2 percent 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 U.S.-China trade talks. MET/L
The financial index .AXFJ recovered after trading much of the day lower, with National Australia Bank NAB.AX adding 0.5 percent, Australia and New Zealand Banking Group ANZ.AX up 0.4 percent and Commonwealth Bank of Australia CBA.AX gaining 0.2 percent.
Elsewhere, rare earths miner Lynas Corp Ltd LYC.AX rose after declaring it would not engage with conglomerate Wesfarmers WES.AX on its "highly conditional" $1.1 billion takeover approach. 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 CSL.AX falling nearly 1.1 percent to a week's low.