May 19, 2020 / 7:26 AM / 7 days ago

Australian shares end at over 2-month high on economic recovery hopes

(Updates to close)

By Soumyajit Saha

May 19 (Reuters) - Australian shares closed at a more than two-month high on Tuesday, led by gains in mining, energy and financial stocks, as a gradual re-opening of some economies boosted sentiment and raised hopes of a demand recovery for commodities.

The S&P/ASX 200 index closed 1.81% higher at 5,559.5, its highest close since March 11.

“Rising commodity prices are the main driver of the movement today... hopes of a recovery in demand persists,” said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.

While firmer Chinese iron ore futures that rose on hopes of more stimulus pushed up miners, energy stocks gained following higher oil prices overnight due to signs that producers are cutting output amid a steady re-opening of economies.

Earlier in the session, sentiment was helped by a robust Wall Street performance overnight on encouraging data for a potential COVID-19 vaccine.

“Though the domestic market did follow the vaccine’s trial results, the optimism will likely not last as underlying economic conditions in the U.S. remain dire”, Somasundaram added.

Heavyweight miners rose for the third consecutive session and hit a near three-month high. Top miner BHP Group jumped 5.9%, and Anglo-Australian peer Rio Tinto advanced 4.7%.

The subindex for oil stocks hit an over two-month high. Engineering services firm Worley Ltd surged 9.6%, while explorer Santos Ltd gained 4.7%.

Financial stocks advanced to hit a one-week peak, with the ‘big four’ banks rising in the range of 1.3% and 2.2%.

“The Aussie dollar continues to benefit from the climbing commodity prices, encouraging further buying into Australian stocks, especially banking stocks, from global investors”, Somasundaram said.

Gold stocks snapped four sessions of gains, in their worst day since May 1, as prices wobbled overnight on optimism surrounding the vaccine trials, though recovering later as fears surrounding Sino-U.S. trade tensions returned.

Gold rose 0.24% to $1,735.00.

The number of issues on the ASX that advanced were 1,132 while 574 declined.

New Zealand’s benchmark S&P/NZX 50 index ended 0.3% higher on the back of gains in financial and utility stocks.

NZ-listed shares of Westpac Banking Corp rose 1.7%, while Meridian Energy Ltd was over 2% higher. (Reporting by Soumyajit Saha in Bengaluru; editing by Uttaresh.V)

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