Australian stocks surge 3.4 per cent
Australian stocks surged in early trading Wednesday on a big boost from Wall Street. ( dpa )
At the bell, the ASX200 index had added 175 points, or 3.4 per cent, to 5,261.
The surge came despite Australian Treasurer Wayne Swan warning that the local economy would not escape damage from the unease on global markets.
"Businesses and households are already feeling the effects of higher rates which, in part reflect global financial turmoil," the finance minister told Parliament. "The deteriorating global outlook does present a significant risk to the Australian economy. There is no doubt Australia's financial system has been affected."
Last week the Reserve Bank of Australia (RBA) raised interest rates by one-quarter of a per cent to 7.25 per cent after inflation moved beyond its target range of 3 per cent. It was the 12th consecutive rise and brought the cost of borrowing to its highest level since 1995.
But analysts are predicting the fourth increase in interest rates in seven months will likely be the last of the series, with many tipping that the next monetary policy movement would be an interest rate cut.