Australian stocks shine in subdued global trading
The nation’s main index surges 1.8% after its central bank keeps rates unchanged.
Australian stocks were the standout performers Tuesday as the central bank kept interest rates unchanged and signaled that they wouldn’t be raised soon. Elsewhere, trading was subdued because Wall Street was shut for the Fourth of July holiday and amid unease over North Korea’s latest missile launch.
In Europe, France’s CAC 40 closed 0.4% lower at 5,174.90 while Germany’s DAX dropped 0.3% to 12,437.13. Britain’s FTSE 100 ended down 0.3% at 7,357.23.
Officials at the Reserve Bank of Australia kept interest rates unchanged at 1.5% after a monthly policy board meeting, saying it was the right level for sustainable economic growth and to hit inflation targets. More important, they indicated that they wouldn’t follow their counterparts in the U.S., Britain, Europe and Canada who have either started raising rates or are considering doing so.
The surprisingly neutral stance of the RBA was felt across markets. The Australian dollar fell 0.7% to $0.7607 as traders priced in a lower rate profile going out, but that helped stocks, and the country’s main S&P/ ASX index surged 1.8% to close at 5,783.80.
“Expectations that the RBA would adopt a more hawkish rhetoric were misplaced,” said Lee Hardman, a currency analyst at MUFG.
Elsewhere in Asia, Japan’s benchmark Nikkei 225 index shed 0.1% to 20,032.35. South Korea’s Kospi declined 0.6% to 2,380.52 and Hong Kong’s Hang Seng slumped 1.5% to 25,389.01. The Shanghai composite index lost 0.4% to 3,182.80. Benchmarks in Taiwan and Southeast Asia also lost ground.
Shares in Seoul wobbled briefly after first reports that North Korea had fired yet another ballistic missile toward Japan. Stocks resumed sliding as more details came in. North Korean state media said it was the country’s first successful test of an intercontinental ballistic missile, flying 580 miles for 39 minutes before falling into the sea.
Benchmark U.S. crude advanced 10 cents to $47.17 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, rose 8 cents to $49.76 a barrel in London.
The euro was down 0.1% at $1.1348 while the dollar fell 0.2% to 113.17 yen.