July 9, 2020 / 6:46 AM / a month ago

Australia shares end higher on stimulus hopes, NZ falls as power firms hit

(Updates to close)

By Soumyajit Saha

July 9 (Reuters) - Australian shares closed higher on Thursday as investors hoped for further stimulus measures to counter the effects of the latest coronavirus-led restrictions, while a drop in power companies dragged the New Zealand market lower.

The S&P/ASX 200 index was 0.6% higher at 5,955.5 points at the end of trade.

“Yesterday’s bad news is good news in the Australia market today as investors seem to follow the lead of their U.S. peers”, said Michael McCarthy, chief market strategist at CMC Markets.

“The overnight rally across asset classes, whether in equities or commodity prices, is driving sentiment today... investors are once again hopeful of further fiscal and monetary stimulus as domestic cases spike.”

Over at Wall Street, Nasdaq hit a record closing high on Wednesday with all three major indexes gaining, supported by technology shares as early signs of an economic rebound offset concern about further virus-led lockdowns.

In New Zealand, the benchmark S&P/NZX 50 index registered its worst session in three and a half months, closing 2.3% lower.

Rio Tinto said on Thursday it will close its New Zealand aluminium smelters venture, citing high costs and a challenging market, putting over a thousand jobs on the line and dealing a blow to the country’s top power producers.

The closure will very likely cause a power oversupply and hurt power companies, and on the NZ bourse shares of electricity providers like Meridian Energy and Contact Energy plummeted 10.8% and 14% respectively.

Back in Australia, energy stocks jumped over 2% after oil prices advanced overnight on signs of a recovery in U.S. gasoline consumption.

Oil and gas explorers Santos and Woodside Petroleum soared 4.1% and 3.5% higher, respectively.

The subindex for tech stocks closed over 3% higher, tracking their peers on Wall Street.

Mining stocks rose about 2%, with global miners BHP Group and Rio Tinto gaining 2% and 3.3%, respectively, helped by higher iron ore prices as the outlook for steel demand improved. (Reporting by Soumyajit Saha in Bengaluru; Editing by Shailesh Kuber)

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