Australian shares ended higher on Tuesday, helped by banks as investors expectations for further rate cuts were strengthened after minutes from the central bank’s May meeting showed it had considered an outsized cut.
The S&P/ASX 200 index rose 0.6% to 8,466.70 points at the close of trade. The benchmark remains a few points shy of the psychologically important 8,500-point level, last seen in mid-February.
Minutes from the Reserve Bank of Australia’s (RBA) May meeting suggested that policymakers had considered an outsized cut of 50 basis points as an “insurance” against global trade risks.
This marks a shift in the central bank’s tone, following the rate cut it delivered in May, which raised the probability of easing at the RBA’s next meeting on July 8 to 77% from 59% last week, according to the RBA Watch tool.
Meanwhile, the country’s first-quarter gross domestic product print, due on Wednesday, is expected to show a modest growth of 0.4%, while recent data showed net exports and government spending both dragged on economic growth last quarter.
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“RBA now views the tariffs and broader trade dispute as being more likely to reduce inflation than add to it. This is a shift from the more equivocal language in April, that ‘the implications for inflation would be more complicated’,” analysts at Westpac said in a note.
Banks led gains on the benchmark on Tuesday, rising 1.2% and mirroring gains in the ‘Big Four’ lenders, which rose 1.2%-1.4%.
Gold stocks were the top advancers on the mining sub-index, underpinned by strong prices, which retreated on Tuesday but still hovered around a four-week peak.
Shares of student placement services provider IDP Education tanked 48.1% and the stock was the worst performer on the ASX 200, as tighter student visa rules in its key markets resulted in a weaker annual profit projection.
New Zealand’s benchmark S&P/NZX 50 index fell 0.7% to finish the session at 12,327.23 points.
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