June 5 (Reuters) - Australian shares rose on Wednesday with most sectors higher, following global market cheer after the U.S. central bank provided markets with a clear indication that it was moving towards a rate cut.
Federal Reserve Chairman Powell said the central bank would respond “as appropriate” to the risks posed by a global trade war and other recent developments. The comments came a day after Australia’s central bank cut its own cash rate to a record low to revive the country’s slowing economy.
Australia’s S&P/ASX 200 index was 0.7% higher at 6,375.7 by 0208 GMT after having gained 0.2% higher on Tuesday.
“Australian investors are responding to the more accommodative stance indicated by the (RBA) rate cut and the commentary overnight by the Fed,” said Michael McCarthy, chief market strategist at CMC Markets.
Australia’s bank stocks, the heaviest constituents on the main index, rose 1.5%.
The “big four” banks advanced as much as 1.4% to 1.7%. All four announced on Tuesday respective cuts in their own mortgage rates as a result of the policy easing.
“In the past, moving interest rates have proved to be a very large benefit to bank margins but in the current environment, given the outright low level of interest rates and the political pressure on the sector, I don’t think too many us will be forecasting major changes in margins,” said McCarthy.
“It does take some of the pressure off given that we’ve seen a trend towards constricting margins in the sector,” added McCarthy.
Mining stocks and energy units in Australia’s resource space notched up as much as 1.1% and 1.7%, respectively.
Major mining players such as BHP Group and Rio Tinto climbed as much as 1.5% and 1.7%, respectively. Woodside Petroleum was 0.5% higher.
However, the rally in risk sentiment weighed on safe-haven gold stocks, sending the sub-index down as much as 2.9%. Gold miner Newcrest Mining Ltd lost 2.2%.
Elsewhere, telco Vocus Group Ltd slumped as much as 20.1% after Swedish private equity firm EQT Infrastructure withdrew its A$3.3 billion ($2.30 billion) offer for the firm.
New Zealand’s benchmark S&P/NZX 50 index was 0.1% or 14.71 points higher, at 9,966.64, supported by gains in banking stocks.
Local units of Westpac and Australia and New Zealand Banking Group Ltd were as much as 1.9% higher, each.
Reporting by Devika Syamnath in Bengaluru; Editing by Sam Holmes