Australia shares rise as central bank upgrades growth forecast

Australian shares closed higher on Tuesday as the central bank raised its economic growth forecast and kept interest rates on hold, with commodity-related stocks leading the way on the benchmark index.

The S&P/ASX 200 index rose 0.6% to 7,067.90, closing higher for the second straight session. Broader Asian markets also edged higher, helped by signs of recovery from the pandemic in major economies.

The Reserve Bank of Australia (RBA) left its key rates at near zero for a fifth straight meeting and upgraded the 2021 economic growth forecast to 4.75% from 3.5% in February.

“Having unleashed the biggest monetary stimulus ever, policymakers aren’t going to let up this time,” CommSec analysts wrote in a note.

RBA Governor Philip Lowe appears willing to do “whatever it takes” to get unemployment closer to 4% and annual wage growth near 3% to see inflation sitting securely within the bank’s 2%-3% target, they added.

Gold and mining stocks led the gains on strong metals prices, while tech stocks lost ground.

“We had improvement in gold prices, which were up more than 1% yesterday, and also oil was up by a similar margin. So, those gains seem to have rubbed-off on resources companies,” said CommSec market analyst Steven Daghlian.

Gold stocks jumped 3.1%, recording their best day since April 16. Sector heavyweight Newcrest Mining gained 1.5%.

The metals and mining index climbed 2.3%. Big miners BHP Group and Rio Tinto added 2.6% and 2.5%, respectively.

Energy stocks rose 1.7% with Worley Ltd leading the gains, up 4.3%, and Beach Energy Ltd gaining 2?%.

New Zealand’s benchmark S&P/NZX 50 index rose 1.1% to 12,912.19, hitting its highest since Feb. 10.

The country’s level of debt is projected to reduce from the middle of the decade as the economy recovers from impacts of the coronavirus, the finance minister said in a pre-budget speech.

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