Australia shares gain as RBA expands quantitative easing

Australia shares gain as RBA expands quantitative easing

Australian shares rose on Tuesday after the central bank expanded its bond buying programme to further support an economic recovery and reiterated its pledge of a prolonged period of record low interest rates.

The S&P/ASX 200 index ended 1.5 per cent higher at 6,762.6 points to mark its best day since Jan. 7.

Australia’s central bank held its cash rate at a record low of 0.1 per cent as expected and insisted that it will not tighten policy until actual inflation is within its 2 per cent-3 per cent target range, while extending its bond-buying program by another A$100 billion. ($76.23 billion)

“The bond buying certainly helps in terms of the liquidity, and keeping long term rates lower. The RBA has certainly been doing a fair bit to make sure that the economy has enough of a boost,” said James Tao, an analyst at CommSec.

“The market was already having a very strong session to begin with, and it (the announcement) has certainly helped propel the market higher, and make up a fair bit of ground that was lost last week.”

Tech stocks, which had already helped the benchmark post early gains, added 4 per cent in their best session since Jan. 14.

Buy-now-pay-later giant Afterpay jumped 7.9 per cent, while artificial intelligence firm Appen added 4.5 per cent.

Miners gained 1.9 per cent in their best session in over three weeks. Global miner Rio Tinto ended 3.4 per cent higher, while rival BHP gained 2.2 per cent.

Meanwhile, the Australian dollar pared gains after the central bank expanded its bond buying stimulus and hardened commitment to hold interest rates for three more years.

The heavyweight financial index rose 1.7 per cent with all of the so-called “Big Four” banks closing in the black.

New Zealand’s benchmark S&P/NZX 50 index slipped 0.4 per cent to 13,044.5 points, with consumer non-cyclicals and healthcare sectors weighing the most.

A2 Milk shed 3.3 per cent and was the biggest loser on the bourse. ($1 = 1.3118 Australian dollars)

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