Australian shares reversed course to end lower on Tuesday, with financials and healthcare stocks leading the decline after the central bank's cautious commentary on the country's near-term economic fortunes.
The S&P/ASX 200 index <.AXJO> settled 0.65% down at 5,252.30, having fallen as much as 1.9% after early gains of 2.6%.
While the Reserve Bank of Australia left its cash rate at a record low of 0.25% on Tuesday, as expected, it warned that a very large economic contraction is likely in the June quarter. The central bank also said the unmemployment rate is expected to reach its highest level for many years.
"The RBA is eyeing a sharp contraction in economic activity and a grim outlook for unemployment. This well and truly snuffed the rally that kicked off the day on the back of positive domestic news on COVID-19 and a big rally offshore," said James McGlew, executive director of corporate stockbroking at Argonaut.
Meanwhile, data from Australia and New Zealand Banking Group <ANZ.AX> showed a 10.3% drop in total job ads in March, erasing the previous month's 1.2% gain, as strict social distancing rules and business closures curbed demand for labour. It was the steepest decline since January 2009, when the global financial crisis was raging.
The day's worst performer was the healthcare index <.AXHJ>, which shed 2.2% for its biggest percentage fall since March 31. Industry behemoth CSL <CSL.AX> declined 2.5%, while Cochlear <COH.AX> ended 4.3% down.
Pulling back from earlier gains, heavyweight financials <.AXFJ> closed 1.3% down, with all the Big Four banks finishing about 1% weaker.
Gold stocks <.AXGD> and miners <.AXMM> helped to limit losses on the broader benchmark, gaining 3.8% and 0.7%, respectively.
Gold explorer West African Resources <WAF.AX> finished about 12% up for its highest close since March 26, while lithium explorer Ioneer <INR.AX> gained 14.5%, its highest close since March 13.
New Zealand's benchmark S&P/NZX 50 index <.NZ50> rose 0.5% to finish the session at 9,809.85.
Tourism holdings <THL.NZ> gained 9.4% while Heartland Group <HGH.NZ> advanced about 11%.
The Reserve Bank of New Zealand (RBNZ) on Tuesday said it would buy up to NZ$3 billion ($1.79 billion) of local government debt to ease liquidity strains in the funding market as part of steps to cushion the economy from the coronavirus pandemic.
(Reporting by Nikhil Subba in Bengaluru; Editing by David Goodman)
