[SYDNEY] Australian shares settled higher on Tuesday as sentiment was boosted by a report that banks would be required to take up more debt from the government to aid stimulus measures to combat the economic damage from the Covid-19 pandemic.
The S&P/ASX 200 index rose 1.1 per cent to 6,007.8 at the close of trade, with US S&P 500 futures up 0.5 per cent. Investors are probably looking forward to a possible rebound in US stocks after a sell-off last week, said Henry Jennings, analyst at Marcustoday. Australian banks will be required to buy up to A$240 billion of new government debt to boost emergency liquidity levels, which will also cut government borrowing costs and help fund coronavirus stimulus spending, the Australian Financial Review reported on Tuesday.
"If the RBA is saying get out there and lend and get the economy moving, that's clearly a good sign for the banks - that the RBA has got their backs and is going to allow them to have some flexibility with capital requirements and balance sheets," Mr Jennings said.