Close Australian stocks recovered from early lows to close 0.4 per cent lower as the RBA’s unexpected decision to hold official rates steady lifted shares out of their hole.
The benchmark S&P/ASX200 index fell 18.4 points, or 0.4 per cent, to 4606.9, while the broader All Ordinaries index lost 17.8 points, or 0.4 per cent, to 4660.6.
Among the sectors, materials and energy were down 0.9 per cent, while financials were trading fell 0.4 per cent.
need2know:
- The dollar slides below 96 US cents
- The Nikkei climbs 1.5% after surprise rates cut
- Gold extends losses to $US1314
- Oil slips towards $US81
- Dow futures are 10 points up at 10,717
The stockmarket opened about 0.9 per cent lower following a weak lead from the overnight offshore session, when Wall Street backpedalled and commodities prices ended softer.
The local bourse was still well into negative territory approaching 2.30pm, when the Reserve Bank of Australia announced it was keeping the cash rate steady at 4.5 per cent.
The decision came as a surprise to market players, with the majority of economists expecting the central bank to deliver a rate hike.
After treading water for about 45 minutes after the central bank's announcement, banks and retailers moved off their session lows and some retailers ended in positive territory.
The dollar slipped more than half a US cent, bonds firmed up and equities recovered.
A surprise move by the Bank of Japan to revert to a zero interest rate buoyed the Tokyo stockmarket, with the Nikkei jumping 1.5 per cent.
Relief for retailers
Cameron Securities client adviser Adrian Leppinus said the interest-rate sensitive sectors of the economy welcomed some interest rate relief.
‘‘The economy can be sort of split in two at the moment - you’ve got the strong resources sector which is really helping the Australian economy, but on the other side of things interest rates are starting to bite,’’ Mr Leppinus said. ‘‘You are seeing with the latest data that the housing price growth that we saw in the first half of this year has slowed and it is starting to have an effect.’’
RBA governor Glenn Stevens said in a statement accompanying the central bank decision that interest rate levels were appropriate for the time being.
‘‘If economic conditions evolve as the board currently expects, it is likely that higher interest rates will be required, at some point, to ensure that inflation remains consistent with the medium-term target,’’ Mr Stevens said.
Mr Leppinus said the central bank was in a difficult position.
‘‘The RBA have got to keep inflation in check, but there are still people struggling on the back of higher interest rates,’’ Mr Leppinus said.
The top banks rose from intraday lows after the RBA's decision to stand pat with rates, despite worries about
pressure on funding costs.
In the financial sector, ANZ closed 11 cents lower at $23.57, CBA shed 29 cents to $51.25, NAB declined eight cents to $25.37 and Westpac slid 21 cents to $23.11.
Retailers too recovered as interest rates held steady, though concerns that another hike is still looming limited
gains.
Harvey Norman finished flat at $3.80 while the department store Myer rose 1.3 per cent to $3.85. Rival David Jones, trading without the rights to its dividend, lost 3.9 per cent to $4.87.
BHP Billiton finished down 50 cents, or 1.3 per cent, at $39.50, while rival Rio Tinto ended off $1.08, or 1.4 per cent, at $77.00.
Banpu extends offer
Making news, Thailand’s Banpu Minerals said it had extended the date of its $2.4 billion takeover bid for Centennial Coal by one week and declared the offer final. Centennial Coal ended up 6 cents, or 1 per cent, at $6.18.
Transfield Services said it had secured $1.1 billion of work in the first quarter of the current financial year, including milestone contracts with BHP and Caltex Australia. Transfield closed down 10 cents at $3.42.
Mr Leppinus said there was still a lot of speculative money on smaller resources stocks.
‘‘You’ve still got some big moves on some of these small stocks - Lynas are up 8 per cent today, Intrepid are up six per cent on no announcement,’’ Mr Leppinus said. ‘‘There are still a lot of people happy to play this boom that has been going on in these smaller commodities stocks.’’
The most traded stock by volume was Alcyone Resources, with 197 million securities changing hands for $10.17 million. Alcyone finished up four-tenths of a cent, or 9.52 per cent, at 4.6 cents, after the company reported drilling results from its Mt Gunyan silver deposit.
Preliminary market turnover was 2.52 billion securities worth $4.46 billion, with 442 stocks up, 655 down and 325 unchanged.
- For market data by sector, click here
- For share price information, click here
- For the latest currency movements, click here
AAP, Reuters, with BusinessDay