(Australian Associated Press)
Australian shares have shot up as investors bet that weaker than expected economic figures means that the Royal Bank of Australia will likely cut interest rates this year.
The benchmark S&P/ASX200 index closed up 46.3 points, or 0.75 per cent, to 6,245.6 points at 1615 AEDT on Wednesday, while the broader All Ordinaries was up 45.4 points, or 0.72 per cent, at 6,326.8.
The Australian Bureau of Statistics announced on Wednesday that GDP had grown by only grew 0.2 per cent for the last quarter of 2018 and just by 2.3 per cent for the year.
“The fact that it was weaker than expected gave a bit more credence to those who are expecting a rate cut,” said CommSec market analyst James Tao.
That gave a boost to Australian equities while driving the local currency down.
The Aussie hit a two-month low on the news, buying 70.33 US cents at 1715 AEDT, from from 70.78 US cents on Tuesday.
A number of economists are now expecting interest rate cuts to 1 per cent this year, from 1.5 per cent, perhaps beginning as soon as May or June.
“Our non consensus call for 50bp of #RBA rate cuts rapidly seems to be becoming a consensus view,” tweeted economist Andrew Ticehurst with Rate Strategist.
“It certainly is an interesting position that the RBA is in,” Mr Tao said, noting the job market seemed resilient despite the economic slowdown.
Among the movers on the ASX on Wednesday was Bubs Australia, which rocketed up 24.17 per cent, to 74.5 cents, after announcing a marketing and distribution partnership with Chinese dairy producer Beingmate.
Myers was up 10.98 per cent, to 45.5 cents, after reporting that it had cut its debt by more than a third, to $95.4 million, and posted a $38.4 million first-half profit.
Barring a catastrophe, it appears the department store is no longer in danger of breaching its covenants with lenders.
Every sector was up, led by mining, which gained 1.11 per cent.
BHP gained 0.86 per cent, Rio Tinto was up 1.09 per cent and Fortescue Metals gained 1.69 per cent.
All four of the big banks were up, with Commonwealth leading the way, gaining 0.93 per cent.
Coles was flat at $11.38 after it said it would start selling goods through eBay.
Telco Telstra was up 0.63 per cent, pharma giant CSL was up 0.07 per cent and ex-dividend Brambles was flat at $11.86.
ON THE ASX:
* The benchmark S&P/ASX200 index was up 46.3 points, or 0.75 per cent, at 6,245.6 points at 1630 AEDT on Wednesday.
* The All Ordinaries was up 45.4 points, or 0.72 per cent, at 6,326.8.
* At 1630 AEDT, the SPI200 futures index was down two points, to 6245.
CURRENCY SNAPSHOT AT 1715 AEDT:
One Australian dollar buys:
* 70.33 US cents, from 70.78 US on Tuesday
* 78.63 Japanese yen, from 79.22
* 62.25 euro cents, from 62.48
* 53.54 British pence, from 53.78
* 104.02 NZ cents, from 104.16
The spot price of gold in Sydney at 1630 AEDT was $US1288.94 per fine ounce, from $US1288.22 on Tuesday.