Australia shares gain as central bank plays up recovery prospects

Australian shares closed higher on Tuesday after the country's central bank reiterated that the impact from the coronavirus crisis could be less damaging than initially feared, repeatedly stoking hopes of a speedy economic recovery.

The S&P/ASX 200 closed 0.3pc firmer at 5,835.10, though lingering worries over U.S.-China relations kept a lid on gains.

The benchmark shot up more than 30pc since sinking to a more than seven-year low in March and is on a five-week winning run, with the country able to contain the outbreak and swiftly position itself for an economic rebound.

The Reserve Bank of Australia (RBA), which last week said the downturn due to the pandemic would likely be less severe than first thought, echoed those sentiments again on Tuesday as it left interest rates unchanged at a record low.

Analysts at Westpac and RBC Capital Markets acknowledged the upbeat tone of the statement, but added that the announcement was in line with market expectations.

A significant decline in new infections, earlier-than-expected easing of restrictions and signs that hours worked had stabilised in early May also helped lift investor sentiment.

"Success in flattening the infection curve raises the prospect that we will see the low point in activity round May-June," said Frank Uhlenbruch, an investment strategist with Janus Henderson.

"We continue to look for a U-shaped profile for growth."

Financial stocks, coming off their best week on record, ended 0.2pc firmer, while an index of tech stocks swelled 1.3pc.

Buy-now-pay-later firm Zip powered 41pc higher, its best day in more than five years, after the company agreed to buy out peer QuadPay in a deal that will help it tap into the fast-growing U.S. market.

New Zealand's S&P/NZX 50 bourse ended 1.4pc higher at 11,034.17.