Australia shares race to 11-year high on rate cut expectations, NZ up

* NZ shares at record high

* Inflation figure boosts Aussie benchmark

* Aussie dollar drops 0.9 pct in the wake of CPI data (Updates milestones, price action, recasts, adds inflation data)

By Mensholong Lepcha

April 24 (Reuters) - Australian shares rose to a more than 11-year peak on Wednesday after data showed inflation slowed sharply last quarter, boosting expectations of a rate cut this year.

The S&P/ASX 200 index gained as much as 1.1 percent to 6,390.50 by 0250 GMT, with volumes expected to remain comparatively lower throughout the session ahead of a public holiday on Thursday. The benchmark added 1 percent on Tuesday.

The headline consumer price index (CPI) was flat in the March quarter, below forecasts for a 0.2 percent increase and the lowest since a negative reading in early 2016.

The muted figure comes after the Reserve Bank of Australia (RBA) said earlier this month that if inflation failed to accelerate as desired and unemployment were to suddenly trend higher, then rates would need to be cut from an already record low of 1.5 percent.

"Australian inflation shows no signs of coming anywhere near the central point of the RBA's 2-3 percent range, and we are biting the bullet and changing our 'on-hold' call for the RBA to a cut, possibly as early as the 7 May meeting," said ING Economics in a research note.

"...we can't now see how the RBA can ignore such a bad inflation miss, even with last week's strong employment gains."

While stocks cheered the data, it pushed the Australian dollar 0.9 percent weaker against the greenback.

The currency has been in a downward trend since late March after the country's central bank abandoned its long-standing neutral bias to say its next move in interest rates was likely down.

Export-reliant stocks, such as index-heavyweight drug manufacturer CSL Ltd climbed more than 3 percent to its biggest one-day gain since late December.

Financials gained with the Big Four banks, ranging from top lender Commonwealth Bank of Australia to No. 4 lender National Australia Bank, up more than 1 percent each.

The Big Four banks are due to announce earnings next week.

Technology stocks rose as much as 2.6 percent, in line with Wall Street gains overnight, to hit an all-time high.

Better-than-expected earnings saw the S&P 500 index and the Nasdaq register record closing highs on Tuesday.

Computershare Ltd and Afterpay Touch Group gained as much as 2.2 percent and 4 percent, respectively.

New Zealand's benchmark S&P/NZX 50 index was trading at its highest level on record, up 0.7 percent at 10,070.10.

Heavyweight a2 Milk Company rose 1.9 percent, while flag carrier Air New Zealand was up 1.5 percent.

For more individual stocks activity click on (Reporting by Mensholong Lepcha Editing by Jacqueline Wong)

First Published: 2019-04-24 03:28:18
Updated 2019-04-24 05:29:05

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