Australia Stocks extend gains on central bank rates cut, bond buying

The Australian share market finished higher for straight second session on Tuesday, 03 November 2020, as risk appetite buying buoyed by the Reserve Bank of Australia decision to lower the cash rate target to 0.1% and launch quantitative easing. At closing bell, the benchmark S&P/ASX200 surged 115.07 points, or 1.93%, to 6,066.36. The broader All Ordinaries advanced 115.38 points, or 1.88%, to 6,262.78.

The Reserve Bank surprised no one by cutting the cash rate by 15 bps from 0.25 per cent to 0.1 per cent. The record low marked the first RBA rate cut on Cup Day since 2011. The central bank also announced a number of other measures in a bid to keep borrowing costs low for borrowers in coming years. The RBA reduced the target for the yield on the three-year Australian Government Bond to around 0.1 per cent, cut the interest rate on new drawing under the Term Funding Facility to 0.1 per cent and announced the purchase of A$100 billion of Government Bonds of maturities of around 5-10 years over the next six months.

All sectors and nine in every ten companies on the ASX 200 improved on Tuesday. Energy stocks remained the best performers, lifting by 5.3% as a group after being the hardest hit last week. Woodside (WPL), Oil Search and Santos (STO) all rose by between 5-7%. Financials added more than 1%, with the so-called "Big Four" banks, except Westpac Banking Corp, closing firmer.

CURRENCY NEWS: The Australian dollar changed hands at $0.709, after falling to an earlier low of $0.7025.

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