Headline indices of the Australian market were higher on Tuesday, 04 June 2019, on bargain hunting after the Reserve Bank of Australia (RBA) cut interest rates for the first time in almost three years at its June policy meeting. However, market gains were capped as traders remained cautious because of concern about the global economy. ASX sectors were mostly higher, with financials, energy, materials, issues being notable gainers. At closing bell, the benchmark S&P/ASX200 index added 11.85 points, or 0.19%, at 6,332.40 points, while the broader All Ordinaries rose 5.94 points, or 0.09%, at 6,416.70.
The Reserve Bank of Australia (RBA) cut its policy rate by reducing the cash rate to a record low 1.25%, as the central bank looks to revive growth and inflation. It was the first reduction in the cash rate since August 2016, and the first during Philip Lowe's tenure as RBA Governor. The RBA governor Philip Lowe said the move would help reduce unemployment and boost inflation back towards its 2-3% target range. RBA governor Philip Lowe remains optimistic about the Australian economy, seeing 2.75% growth this year and next, despite some headwinds from the US-China trade dispute.
Shares of banks and financials traded higher, following the Reserve Bank's decision to cut the interest rate. ANZ has become the first major bank to respond to the RBA's decision, cutting its variable interest home loan rate by 18 basis points, holding back 7 basis points. CBA has passed on the full 0.25%. The big four banks - National Australia Bank, ANZ Bank, Commonwealth Bank and Westpac - were higher.
Shares of materials and resources went up on bargain hunting after having lost 3.5% over the previous four sessions when geopolitical risks, principally over the escalating Sino-US trade war, had raised doubts about growth and weighed on global risk sentiment. Mining majors Rio Tinto and BHP Group gained as much as 2.1% and 2.4%, respectively. Miners of the precious metal such as Newcrest Mining and Evolution Mining climbed up to 2% and 4.2%, respectively. Oil and gas firm Santos gained up to 1.7%.
CURRENCY NEWS: The Australian dollar was virtually flat against the U.S. dollar on Tuesday, after the RBA, as widely expected, has cut the cash rate from 1.5% to a fresh historic low of 1.25%.
On Wall Street, the Dow eked out a gain of less than 0.1% to finish at 24,819.78, even though the Tech-rich Nasdaq plunged 1.6% on reports of stepped-up antitrust scrutiny from Washington.