NZ shares soar on hefty rate cut, Australian market snaps 5-day slump
* NZ jumps after cenbank shocks with big rate cut
* Gold stocks power ASX gains, other miners weigh
* Rare earths shine amid trade war gloom
(Updates to close)
August 7 (Reuters) - New Zealand's stock market rallied on
Wednesday after the nation's central bank stunned investors with
a steep 50 basis point rate cut, while Australian shares snapped
a five-session losing streak, powered by safe-haven gold stocks.
New Zealand's S&P/NZX 50 index finished 1.9% higher
at 10,786.26. The benchmark rose sharply after the central bank
jolted markets by cutting interest rates a steep 50 basis points
and flagged the risk of going nuclear by taking rates below
Energy retailer Mercury NZ was the top gainer and
closed at a record high.
The New Zealand move underscored how worried policymakers
have become over the broadening impact of trade frictions.
Global risk assets were caught in a week-long sell-off after
a dramatic escalation of the Sino-U.S. trade war, but a modicum
of calm was restored when U.S. President Trump played down the
prospects of the trade dispute being drawn out.
Trump last week threatened further tariffs on Chinese goods,
triggering the initial shakeout in markets which then went into
a tailspin when Washington labelled Beijing a currency
manipulator after it let the yuan slip past a key 7-per-dollar
level to 11-year lows.
Signs of support for the yuan from China's central bank also
helped ease investors' fears, though the currency slipped
further in morning trade, keeping markets guessing.
Australia's S&P/ASX 200 index ended 0.6%, or 41.4
points higher, at 6,519.5. The index tumbled 2.4% in the
Safe-haven gold stocks rocketed to a record high
close, as metal prices continued to rise on the uncertainty
surrounding U.S.-China trade relations.
Gold miner Newcrest Mining rose 3.8% to hit its
best level in nearly eight years, while peer St Barbara
jumped 5.4% to end at a four-month high.
Australia's rare earths miners also rose against the
backdrop of the trade war. China is the biggest supplier of
rare-earths and it has previously hinted at limiting supply of
Rare earths miner Lynas Corporation gained 2.6%,
while Northern Minerals and Alkane Resources Ltd
were 1.6% and 1.3% higher, respectively.
On the downside, and reflecting the worries over demand,
major mining stocks BHP Group Ltd and Rio Tinto
closed 0.9% and 2.1% lower. China is the biggest buyer
of Australian resources including iron ore and copper.
Energy stocks also remained subdued, with Woodside
Petroleum closing 0.4% lower.
The banking index ended stronger but top lender
Commonwealth Bank of Australia saw its worst close
since early June after posting its first back-to-back annual
profit decline in more than a decade, flagging further pain to
margins from low interest rates and swelling costs. The stock
(Reporting by Devika Syamnath in Bengaluru
Editing by Shri Navaratnam)
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