Australia: Shares end higher as RBA reaffirms dovish policy stance

[SYDNEY] Australian shares closed higher on Wednesday, with financials leading gains, after the Reserve Bank of Australia reaffirmed it would hold rates at record low levels for several years.

The S&P/ASX 200 index ended 0.9 per cent higher at 6,824.6 points and recorded a third consecutive session of gains.

RBA governor Philip Lowe, in a speech in Canberra, reiterated the bank's stance to maintain cash rate at 0.1 per cent and insisted the country will need to maintain "very significant monetary support" for several years.

Mr Lowe's comments came a day after the RBA announced it had expanded its bond-buying programme by another A$100 billion (S$101.4 billion) to support an economic recovery.

"There were no big surprises from the speech today. I think the RBA just wanted to make it clear that interest rates will be on hold for a number of years," said Steven Daghlian, a market analyst at CommSec.

On Friday, the governor will address the house of representatives economics committee and the quarterly statement on monetary policy will also be released.

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Broader sentiment was boosted as Wall Street rallied overnight on renewed hopes for US President Joe Biden's proposed US$1.9 trillion pandemic relief package, and strong corporate earnings in the United States.

Financial stocks closed at their highest in 11 months, with Australia and New Zealand Banking Group rising 2.1 per cent and all other "Big Four" banks also seeing gains.

Energy stocks gained following a rise in oil prices on expectations oil stocks will return to 'normal' levels this year.

Santos rose to a one-week high, while Woodside Petroleum gained 0.8 per cent.

By contrast, miners shed 1.2 per cent as weak iron ore demand in China pushed prices lower, with the world's largest miner BHP closing 2.2 per cent lower.

New Zealand's benchmark S&P/NZX 50 index edged 0.4 per cent higher to 13,091.21 points, as the country's unemployment rate dropped to 4.9 per cent in the fourth quarter, beating analyst expectations.

REUTERS