Sydney - Australian stocks traded in a wide range Tuesday with the announcement mid-session of a 1-per-cent interest rate cut powering the market off morning lows. The AXS 200 put on 78 points, or 1.7 per cent, to close the day at 4,618.
Sellers swamped the market at the opening bell with the index losing more than 3 per cent in the first minutes of trading.
But the afternoon statement from the Reserve Bank of Australia (RBA) of a bigger-than-expected cut in the rate at which it lends to banks reversed the direction and took stocks out of the red.
"We saw the market do a huge turnaround," said Macquarie Private Wealth analyst Lucinda Chan. "Leading the market higher were the financials and the big mining stocks. Also we have seen very very strong support coming across the board."
The sharp easing of monetary policy further weakened the Australian dollar's performance on the cross rates. The local currency, which had given up 5 US cents in overnight trading to reach a two-year low of 72 US cents, dropped further to 71 US cents.
The Australian dollar has depreciated more than 20 per cent since near-parity in June as fears grow that a worldwide recession will cut demand for coal, iron ore and other big export earners.
"Commodities demand numbers of the US have been shocking recently and there are signs of slowing in China, so people are reassessing that," said National Australia Bank economist Jeff Oughton. "Both of those work against the Aussie dollar."
