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Australasia, News

Australian shares rise as U.S. Fed’s bond purchase update boosts sentiment

By Soumyajit Saha

June 16 (Reuters) – Australian shares jumped more than 3% on Tuesday and were set to snap three sessions of losses, as the U.S. Federal Reserve’s modification of its bond purchase program boosted risk sentiment.

The S&P/ASX 200 index rose 3.2% to 5,901.5 in early trade. It had ended 2.2% lower in the previous session and is down 14.43% so far this year.

The Fed’s decision to try to make more companies’ securities eligible for a liquidity boost from its bond purchase program soothed investors rattled by fears of a resurgence in coronavirus cases worldwide over the weekend.

Overnight, the U.S. Dow Jones Industrial Average rose 0.62%, the S&P 500 gained 0.83%, while Nasdaq rose 1.43%.

Data released on Monday showed quickening industrial output growth in Australia’s biggest trading partner China, further buoying sentiment.

Financial stocks gained 3.7%, with all of the ‘big four’ banks rising over 3%.

Miners rose 2.34%, with global miners BHP Group and Rio Tinto advancing 1.5% and 1.8%, respectively.

Chinese iron ore futures on the Dalian Commodity Exchange rose 0.1%.

The energy subindex rose 4.32%, after oil prices surged overnight on signs of demand recovery and hopes that OPEC+ members would stick to promises of an output cut.

Brent crude futures fell 0.33% to $39.59 a barrel while U.S. West Texas Intermediate (WTI) crude lost 0.62% to $36.89 per barrel.

Viva Energy Group Ltd was the top gainer on the benchmark index, despite forecasting lower first-half core profit.

The company also brought forward planned maintenance at a unit of its Geelong refinery.

The number of issues on the ASX that advanced were 957, while 184 declined as a 5.2-to-1 ratio favoured advancers.

In New Zealand, the benchmark S&P/NZX 50 index rose 1.04% to 10,977.5.

Utilities co Meridian Energy Ltd jumped 2%, while Goodman Property Trust rose 1.2%.

(Reporting by Soumyajit Saha in Bengaluru; Editing by Rashmi Aich)

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