The cut will see variable mortgages fall to the lowest level in 60 years.

"Ideally more help from fiscal stimulus is required but so far the government appears to be focused on a “targeted” and “modest” approach. As a result most of the pressure to support the economy remains on the RBA."

The central bank is expected to cut rates to 0.25 per cent in April and then start buying assets to inject more money into the economy.

Commonwealth Bank closed 1.7 per cent lower at $79.11, ANZ slid 1.4 per cent to $24, NAB dropped 1.4 per cent to $24.13 and Westpac dropped 1.1 per cent to $22.94, but was the most heavily traded of the banks. The financial sector closed at a 56-week low.

CSL has now overtaken Commonwealth Bank as the most highly valued stock on the ASX, as CSL rose from a valuation of $138.9 billion to $142 billion and Commonwealth Bank shrunk from a market cap of $142.4 billion today to $140 billion. BHP has a market cap of $160 billion but is dual listed on the London exchange.

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In contrast to the lacklustre performance for local shares, most regional markets posted strong gains for the session, led once again by mainland Chinese equities which rose between 1 per cent to 2 per cent in late trade.

Japanese stocks were the exception to the rule, sliding sharply late in the session on reports the draft communique agreed by G7 nations to combat the affects of the coronavirus outbreak did not specifically discuss additional fiscal spending or coordinated interest rate cuts from central banks.

The biggest gains on the ASX was a 7.2 per cent rise in Xero to $79.94 and a 6.5 per cent rise in Bega Cheese to $4.27. The biggest decline was Perenti Global's 6.4 per cent fall to $1.33 following two days of gains.

At the Australian close, S&P 500 futures in the United States were pointing to a decline of 0.1 per cent after surging 4.6 per cent on Monday. STOXX 50 futures in Europe were pointing to a gain of 0.5 per cent at the open.

Despite the RBA’s decision to cut interest rates, the Australian dollar rose 0.2 per cent to US65.55¢ in late Asian trade. Australian 10-year bond yields were sitting at 0.779 per cent late in the session, not far above the record low hit on Monday.