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New Zealand shares near record highs after bumper rate cuts

New Zealand shares closed Wednesday at a new record high after the central banks delivered a rate cut that was larger than expected. Australian stocks ended slightly lower due to losses in consumer discretionary, technology and other stocks.

The S&P/NZX 50 index for New Zealand closed the session at its highest level of 13,568.48, up 0.3%.

The benchmark index fell as much as 0.2% when it opened, but quickly reversed its course after the Reserve Bank cut its main cash rate by 50 basis points.

Policymakers expressed concern about the fragile state of the economy, but left the door wide open to further easing.

According to Jeremy Sullivan of Hamilton Hindin Greene, an investment adviser in Christchurch, New Zealand, the decision was against 15 out of 26 economists who were surveyed and had predicted a reduction by a quarter point. This is the most divided decision on interest rates since COVID-19.

We have a market that is yield sensitive with a lot of high-dividend-paying firms. A move in interest rates relative to dividends our companies can pay is putting upward pressure the index, said Sullivan.

The benchmark index was led by gains in utilities and industrials. Meridian Energy shares rose by nearly 3% while NZX, the operator of bourses, gained 2.5%. The NZX shares of Australian lender Westpac Banking Group posted a record closing high.

The S&P/ASX 200 Index in Australia closed at 8,947.60, a loss of 9.2 points.

In their third session of losses, consumer discretionary stocks that are sensitive to economic cycles dropped by 1.5%. Wesfarmers, the conglomerate, fell to a new low in a month while JB Hi-Fi, an electronics retailer dropped to its lowest level in three weeks.

The Australian benchmark index continued to decline as local technology stocks fell to a new low, in line with the overnight losses on Wall Street.

Sector leaders WiseTech Global (-0.4%) and Xero (-1.7%) both lost ground.

The heavily weighted miners broke the trend and rose 0.2%. Rio Tinto, South32 and other index constituents advanced by 0.9% and 2.7% respectively.

(source: Reuters)