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Local stocks near record high after RBA’s dovish tone spurs investors

Australia’s sharemarket on Tuesday closed near record highs first tapped in July, with both the S&P/ASX 200 and the All Ordinaries comfortably above key levels of 6800 and 6900 points respectively. The move to equities was driven by the release of the Reserve Bank Board minutes which strongly hinted at future rate cuts to 0.5 per cent or even 0.25 per cent in 2020. This pushed investors towards seeking returns from the sharemarket, as rates on bank deposits are expected to fall to nearly nothing.

The S&P/ASX200 closed 0.7 per cent higher at 6814.2 points after a late afternoon rush for stocks saw the index push through 6800 at about 3.45pm. The All Ords closed 42.4 points higher at 6914.1, the highest closing price since July 30.

Federal Reserve chair Jerome Powell.

Federal Reserve chair Jerome Powell.Credit:Bloomberg

US markets closed at fresh highs prior to US President Donald Trump meeting with chairman of the Federal Reserve Jerome Powell. After the meeting Trump tweeted he wanted US interest rates to be lower than comparable countries. Rates were cut in October to between 1.5 per cent and 1.75 per cent.

The Federal Reserve released a statement noting it “will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.”

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