Aussie shares jumped higher today, despite weakness in international markets overnight.
Our market was boosted by the RBA’s decision to cut the official cash rate by 50 basis points, to 3.75%. The cut was 25 basis points more than economists had expected.
It’s the largest cut to the cash rate since a 100 basis points reduction in February 2009 and the first cut since the December meeting
RBA governor Glenn Stevens said growth in the world economy slowed in the second half of 2011 and is likely to continue at a below-trend pace this year.
In the central bank’s statement it said that “a reduction of 50 basis points in the cash rate was, in this instance, judged to be necessary in order to deliver the appropriate level of borrowing rates”
Many economists believe the larger-than-expected cut to be somewhat of an admission by the RBA that they got the economy wrong over the last few months.
All sectors closed pretty comfortably above water; consumer staples and energy stocks were the standout performers.
The banking majors all strengthened; ANZ put on 1.6%, whilst Westpac was up 1.4%.
The big miners were mixed as were commodity prices. BHP advanced 1.2% whilst rival Rio Tinto declined 0.8%.
In takeover news, Alesco Corporation (+42.9%) has received a $2 a share bid from Dulux Group (-4.2%).
The ASX 200 climbed 33 points (+0.8%) to close at 4430, its highest close for the year.