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RBA lifts cash rate by 25 bps
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Banks lead gains
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InvoCare emerges top gainer after A$1.81 bln buyout bid
(Updates to close)
By Rishav Chatterjee
March 7 (Reuters) - Australian shares reversed course to
end higher on Tuesday, supported by banking stocks, as an
expected quarter-point rate hike by the central bank spurred
investors' risk appetite.
The S&P/ASX 200 index was up 0.5% at 7,364.7 points
at the close of trade. The benchmark ended 0.6% higher on
Monday.
The Reserve Bank of Australia (RBA) lifted its cash rate by
25 basis points to the highest in more than a decade at 3.60%.
This was the tenth increase since last May, lifting rates by a
total of 350 basis points, easily the most aggressive tightening
campaign by the central bank in modern history.
In a dovish step, the RBA changed a reference to further rate "increases", instead saying "further tightening" would be needed, suggesting it might be nearing the end of its rate hike cycle - one of the most aggressive in decades.
"We anticipate the market will like the dovish tone.
Ultimately, this language may point towards RBA pausing rate
increases in May after a final hike in April, bringing the cash
rate to 3.85%," said Josh Gilbert, market analyst at eToro AUS
Capital.
Financials led the gains on the benchmark with the
sub-index ending 0.9% higher, as the rate hike and potential
tightening lifted demand for banking stocks.
All "Big Four" banks traded in the black with a climb of up
to 1.3%.
Energy stocks joined the rally as upbeat oil prices
on China demand optimism helped the sub-index finish 1.2%
higher.
Sector majors Woodside Energy and Santos rose 1.5% and 2.7%, respectively.
Miners dimmed the mood as they extended losses
after seeing a heavy sell-off on lower iron ore prices
overnight. Mining giants BHP Group and Rio Tinto declined 1.1% and 0.3%, respectively.
Among individual stocks, funerals company InvoCare Ltd received A$1.81 billion ($1.21 billion) buyout bid from
private-equity TPG Global. Shares of InvoCare ended the day
34.4% higher.
New Zealand's benchmark S&P/NZX 50 index was steady
and ended the session at 11,919.6.
($1 = 1.4901 Australian dollars)
(Reporting by Rishav Chatterjee in Bengaluru; Editing by Sherry
Jacob-Phillips)
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