Interest rates cut to record levels as markets rebound
Australia’s sharemarket has powered almost two per cent higher in a frenzy of buying as investors punt on global central banks easing the economic pain caused by the coronavirus.
The RBA cash rate could hit 4.85 per cent (AAP Image/Joel Carrett)
Buying across the board lifted the S&P/ASX200 index 124.7 points, or 1.95 per cent, to 6,516.2 at midday AEDT after eight dramatic days of selling.
The broader All Ordinaries index lifted 131.4 points, or 2.03 per cent, to 6,592.5 as huge volumes changed hands.
All indices were higher at noon, with tech and healthcare stocks up more than three per cent and materials and telcos up more than two per cent.
The move came ahead of confirmation the Reserve Bank had cut the cash rate to a new record low of 0.5 per cent
“The coronavirus has clouded the near-term outlook for the global economy and means that global growth in the first half of 2020 will be lower than earlier expected,” RBA governor Philip Lowe said in his address after the bank’s March board meeting.
As the sharemarket rallied, ResMed was up $1.34, or 5.54 per cent, at $25.62 as giant blood products company CSL gained $9.20 to $315.31.
Banks and insurers jumped.
Oil prices and most offshore equities markets rose overnight on news that global central banks were set to talk about how to deal with the coronavirus outbreak’s impact on economic growth.
Woodside Petroleum gained 22c to $28.55 but Oil Search lost 4.5 cents to $5.495.
CMC Markets and Stockbroking chief strategist Michael McCarthy said industrial commodities also jumped overnight on raised expectations that central banks would act to offset economic damage from the COVID-19 virus.
“The first test of this market theory comes today when the Reserve Bank of Australia decides on interest rates at its monthly board meeting,” he said.
The local market remains almost certain the RBA will act to cushion the impact of the coronavirus by cutting the cash rate 25 basis points to a record-low 0.5 per cent.
The few sells on Tuesday included gold-miner Newcrest Mining, which was down 13c at $26.97 at noon, and supermarket giant Woolworths, which lost 17 cents to $38.46.
Medical gloves maker Ansell was also off, down 44c at $29.05 at 1212.
The Aussie dollar was buying 65.38 US cents at noon, up from 65.27 US cents on Monday as the stockmarket closed.
– AAP
