(Reuters) - Australian shares finished higher on Wednesday, in line with the rally in global stocks after comments from the U.S. central bank provided firm clues it was closer to cutting interest rates, supporting investor confidence.
Federal Reserve Chairman Jerome Powell on Tuesday said the U.S. central bank will respond "as appropriate" to the risks posed by a global trade war and other recent developments. U.S. Treasury yields rose as investors sold bonds after Wall Street stocks strengthened.
Australia's S&P/ASX 200 index rose 0.4% to 6,358.5, in its second session of gains. Stocks also rose on Tuesday after Australia's central bank lowered its cash rate to a record low to revive the country's slowing economy.
Financials, the sector with the heaviest weighting in the benchmark, gained over 1% and propelled the main index. The "big four" banks climbed between 0.9% to 1.4%.
"In the past, moving interest rates have proved to be a very large benefit to bank margins but in the current environment, given the outright low level of interest rates and the political pressure on the sector, I don't think too many us will be forecasting major changes in margins," said Michael McCarthy, chief market strategist at CMC Markets.
"It does take some of the pressure off given that we've seen a trend towards constricting margins in the sector," added McCarthy.
Energy stocks ended higher after five sessions in the red. Oil and gas firm Woodside Petroleum rose 0.3%.
The mining sector pared earlier gains to close only slightly higher due to a sharp fall in gold stocks as the risk rally weighed on the safe-haven metal. This offset gains from the biggest miners, BHP Group and Rio Tinto, which rose 0.6% and 1%, respectively.
Among gold miners, Dacian Gold nosedived 67.5% to close at its weakest since 2015, after it flagged an outlook cut.
In other sectors, telco Vocus Group slumped as much as 17.7% after Swedish private equity firm EQT Infrastructure withdrew its A$3.3 billion offer for the firm.
New Zealand's benchmark S&P/NZX 50 index ended little changed at 9,956.06, although banks gained, with the local units of Westpac and Australia and New Zealand Banking up 1.5% and 1.7%, respectively.
(Reporting by Devika Syamnath in Bengaluru; Editing by Sam Holmes)
