Australia Market follows global peers higher

Headline indices of the Australian market closed higher for second day in row on Wednesday, 05 June 2019, thanks to a rally in U.S. stocks overnight after U.S. Federal Reserve policymaker's remarks touching on a possible interest rate cut given rising risks to the economy. Meanwhile, better than expected Australia's service sector activity data further aided sentiments. However, the weak seasonally adjusted GDP growth data capped the market gains. ASX sectors were mostly higher, with information technology, financials, realty, and consumer discretionary issues being notable gainers. At closing bell, the benchmark S&P/ASX200 index inclined 26.16 points, or 0.41%, at 6,358.52 points, while the broader All Ordinaries rose 26.86 points, or 0.42%, at 6,443.59.

Investors risk sentiments underpinned after U.S. Federal Reserve Chairman Jerome Powell signalled a possible rate cut if the economy required in a boost to riskier assets. Powell said the central bank would act "as appropriate" to address trade war risks a day after St. Louis Fed chief James Bullard said a rate cut may be warranted soon. Powell said the Fed was "closely monitoring the implications" of a trade dispute that has disrupted global markets.

The voting member of the policy-setting Federal Open Market Committee said the ongoing trade friction with China and Mexico, if prolonged, could result in a sharper than anticipated fall in the U.S. economy. Bullard's remarks were in line with those made last week by John Williams, his counterpart in New York, calling for rate cuts "aggressively when deflation or a severe downturn threatens. Fed voting members seem to be inclining toward a rate cut, with the market is factoring in a cut that could be conducted possibly next month."

Shares of banks and financials traded higher. The big four banks - National Australia Bank, ANZ Bank, Commonwealth Bank and Westpac climbed between 0.9% to 1.4%.

Shares of materials and energy were also higher. Oil and gas firm Woodside Petroleum rose 0.3%. BHP Group and Rio Tinto rose 0.6% and 1%, respectively.

Among individual stocks, telco Vocus Group slumped as much as 17.7% after Swedish private equity firm EQT Infrastructure withdrew its A$3.3 billion offer for the firm.

ECONOMIC NEWS: Australia GDP Adds 0.4% On Quarter In Q1 -- Australia's gross domestic product gained a seasonally adjusted 0.4% on quarter in the first three months of 2019, the Australian Bureau of Statistics said on Wednesday, up from the 0.2% increase in the three months prior. On an annualized yearly basis, GDP gained 1.8%, slowing from 2.3% in the previous three months.

Australia AiG Services Sector Climb Into Expansion In May-- Australia services sector climbed back into expansion territory in May, the latest survey from the Australian Industry Group revealed on Wednesday with a Performance of Services Index score of 52.5. That's up sharply from 46.5 in April and it moves back above the boom-or-bust line of 50 that separates expansion from contraction.

CURRENCY NEWS: The Australian dollar was little changed against the U.S. dollar on Wednesday. The Australian dollar last changed hands at $0.7000, after touching an earlier low of $0.6985.

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