Australia: Shares jump 1% as central bank holds rates on housing market boom

[BENGALURU] Australian shares ended a three-session losing streak to finish higher on Tuesday as the central bank sounded optimistic about a recovery in the coronavirus-hit economy while keeping interest rates at an all-time low.

The Reserve Bank of Australia (RBA) held rates at near-zero in a widely expected move as easy monetary and fiscal policies underpin the economy, fuelling demand for homes and boosting construction activity.

Economic recovery is underway and recent data have generally been better than expected, said RBA governor Philip Lowe, while reiterating the board was unlikely to raise the cash rate for at least three years and was prepared to do more if necessary.

The S&P/ASX 200 index was up 1.1 per cent at 6,588.5 points at the close of trade. The benchmark ended lower on Monday over Australia's deepening tensions with its largest trading partner China.

Investor focus will now shift to the third-quarter gross domestic product data, which is likely to show 2.5 per cent growth in the economy in September quarter, bouncing back from its first recession since 1991, according to a Reuters poll.

"With good data coming in over the last couple of days, optimism around an economic bounceback is getting some evidence," said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking.

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The Australian Bureau of Statistics showed that government spending rose in the September quarter, aided by a host of fiscal stimulus, while the domestic housing market roared back to life as record-low interest rates boosted demand from first-time buyers.

In broad-based gains, gold stocks climbed 2.9 per cent and led the charge on the benchmark as bullion prices rose on worries over spiking Covid-19 cases.

Fast food retailer Collins Foods and pizza company Domino's Pizza Enterprises were the biggest boost to the benchmark.

New Zealand's benchmark S&P/NZX 50 index snapped two sessions of gains to end 0.3 per cent lower.

REUTERS