That brings us to the end of the blog for today - thanks everyone for reading and posting your comments.
The energy sector was the market’s worst performer, sliding 1 per cent. Woodside led the plunge falling 46 cents, or 1.2 per cent to $38.76. Santos was next down 1.2 per cent at $13.87, while Origin Energy finished 0.8 per cent weaker at $12.03.
Among the miners, index heavyweight BHP Billiton finished 13 cents, or 0.4 per cent lower, at $35.62, while Rio firmed 24 cents, or 0.4 per cent, at $59.86.
Telstra was among the best performing stocks, rising 0.4 per cent to $5.07.
Bell Potter analyst Charlie Aitken said this morning that investors should respond to low deposit and borrowing rates by moving their money away from cash into a large capital equity like Telstra.
Australian shares close slightly lower, with investors turning to the local reporting season for cues after the Reserve Bank cut its key policy rate by 25 basis points as widely expected.
The benchmark S&P/ASX200 index fell 5.7 points, or 0.1 per cent, to 5105.6, while the broader All Ords lost 5.8 points, or 0.1 per cent, to 5088.0.
Westpac customers will receive a bigger cut in their mortgage rates than the Reserve Bank's official reduction, after the bank said would cut home loan interest rates by 0.28 percentage points.
The country's second biggest bank, which has had the highest advertised rates of the big four for several years, today said it would cut its standard variable interest rate to 5.98 per cent.
The bank's executive in charge of retail and business banking, Jason Yetton, said its move to out-cut the RBA was designed to boost confidence, amid signs of a recovery in housing.
“The latest consumer surveys have shown that confidence is the key to our customers’ well-being
and we believe that what we have announced today will help support growth in the housing sector as
well as improve the faith in Australia's economic outlook,” Yetton said.
ANZ will announce its change in mortgage rates this Friday. If it follows its peers and passes on at lest 0.25 percentage points in cuts, Westpac will still have the highest advertised mortgage rates among the big four.
The nation's biggest lender, the Commonwealth Bank, has joined the rush to match the RBA's cut.
CBA says it will cut its standard variable mortgage rates by 0.25 percentage points to 5.9 per cent.
The bank says it was forced to balance the interests of people with deposits, loans and its many shareholders.
“The Commonwealth Bank believes this is a balanced decision, and takes into account both domestic and offshore factors,” said Matt Comyn, who runs its retail banking division.
The cut means CBA has the second lowest SVR of the big four after NAB.
The RBA statement itself has not materially changed from the July statement, says IG's Chris Weston:
- But some were prepared for more dovish central bank, while the line ‘it is possible the exchange rate will depreciate over time’ is a slight downgrade from Glenn Stevens’ speech last week, in which he said he wouldn’t ‘be surprised to see a lower AUD’.
- We now wait for this week’s employment data and Statement of Monetary Policy (SoMP) for further clues on rates.
- The RBA is now in wait and see mode and clearly a deteriorating picture over the next two months should see either an October or November cut materialise just in time for Christmas. We suspect there were some hoping for forward guidance from the RBA, although this seems premature to us at this stage.
For those looking for a clear guidance of further rate cuts, it just wasn't there, says CBA chief economist Michael Blythe:
- The decision to take out the phrase 'scope to ease' has certainly muddied the waters. It wasn't as dovish as those in the further-rate-cut camp were hoping to see.
- Whether they cut again will depend on what sort of inflation numbers they put on the table at Friday's quarterly statement. If they bump them up, that would suggest they'd be reluctant rate cutters from here. If they haven't, then there will probably be more scope to cut rates.
It wasn't a surprise and a lot of the commentary is very much in line with the view we had, HSBC's chief economist for Australia Paul Bloxham says:
- Growth is below trend at the moment. Inflation is low enough to allow them to cut rates further and so they delivered a rate cut to try and provide further support for growth.
- The RBA statement is a little less dovish than before. They didn't repeat that the inflation outlook provided them with further scope to cut rates from here.
- I don't expect the central bank to cut rates again in this easing cycle.
Some reactions on Twitter to the rate cut, and statement. Most seem to agree that the RBA is sounding less dovish this time around, possibly signalling the end of its easing cycle:
AUD 0.8950.... We might see a decent bounce given RBA view & likelihood this is bottom of the cycle for rates— Stephen Koukoulas (@TheKouk) August 6, 2013
How financial markets work: RBA cuts 25 bps and says a weaker currency would help growth. Traders respond by driving the Aussie higher.— enda curran (@endacurran) August 6, 2013
RBA statement trying to sound dovish but I think we're close to end of the rate cutting cycle. Market thinks so too, A$ up on news #ausbiz— Peter Esho (@PeterEsho) August 6, 2013
Here's the statement by the RBA chief explaining the move. Note the last paragraph, which in contrast to the previous statements doesn't specifically mention possible further cuts:
At its meeting today, the Board decided to lower the cash rate by 25 basis points to 2.5 per cent, effective 7 August 2013.
Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year. Commodity prices have declined but, overall, remain at high levels by historical standards. Inflation has moderated over recent months in a number of countries.
Globally, financial conditions remain very accommodative, though the recent reassessment by markets of the outlook for US monetary policy has seen a noticeable rise in sovereign bond yields, from exceptionally low levels. Volatility in financial markets has increased and has affected a number of emerging market economies in particular.
In Australia, the economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment. The unemployment rate has edged higher. Recent data confirm that inflation has been consistent with the medium-term target. With growth in labour costs moderating, this is expected to remain the case over the next one to two years, even with the effects of the recent depreciation of the exchange rate.
The easing in monetary policy over the past 18 months has supported interest-sensitive spending and asset values, and further effects can be expected over time. The pace of borrowing has remained relatively subdued, though recently there are signs of increased demand for finance by households.
The Australian dollar has depreciated by around 15 per cent since early April, although it remains at a high level. It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy.
The Board has previously noted that the inflation outlook could provide some scope to ease policy further, should that be required to support demand. At today's meeting, and taking account of recent information on prices and activity, the Board judged that a further decline in the cash rate was appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.
Banks have wasted no time in passing on today's 0.25 percentage point cut to home loan customers.
Within minutes of the RBA's decision, the National Australia Bank cut its standard variable interest rate to 5.88 per cent - which it said was the lowest in four-and-a-half years. Bank of Queensland has also cut its standard variable rate 6.01 per cent.
BoQ chief executive Stuart Grimshaw said the a quick decision was especially important for business customers in the current environment.
“Rate cuts aren’t a silver bullet in isolation, but they contribute to increasing confidence and a quick decision from us is just one way we can help provide some certainty to our customers,” he said.
The dollar jumped on the decision, rising as high as 89.71 US cents, but has since drifted back to 89.41 US cents, still higher than before the decision.
The Australian dollar rose a third of a US cent on Tuesday after the Reserve Bank lowered its cash rate, as expected, but did not provide a clear signal that it may cut again.
No surprise: the RBA has cut the cash rate to 2.5 per cent, its lowest since 1959.
Some comments on the eco data out earlier: RBC senior economist Su-Lin Ong says the job ads data was disappointing for an economy that was moving away from one driven by mining investment.
‘‘The ANZ jobs data shows the unemployment rate will continue to rise for the remainder of the year,’’ she said. ‘‘We actually think the most important data was the ANZ job vacancies data; the trend is very much all in one direction,’’ she said.
Ong said the bright spot was the trade data, saying the fall in exports was a bit of a correction from the previous months.
‘‘The data shows you’re going to be relying on net exports for economic growth, the domestic demand is going to be weak and that is going to be further exacerbated by a deterioration in the labour market,’’ she said.
JPMorgan economist Tom Kennedy said although the trade data came in lower than expected, it was still the best result since December 2011.
‘‘It definitely does signal that Australia’s external sector is healing to a certain extent, and making the required transition toward an improvement in net exports, which will add to growth as the peak in resource investment approaches later this year,’’ Kennedy said. ‘‘That’s going to help to plug some of the holes that will be left over from fading resource investments.’’
If the Reserve Bank cuts interest rates in 25 minutes but gives no indication of further easing, the Aussie could strengthen against the greenback, a market strategist predicts.
The dollar has fallen about 15 per cent against it US counterpart since April, and is hovering above three-year lows at 89.32 US cents ahead of the RBA’s meeting.
Evan Lucas, a market strategist at IG Markets, says the language of the central bank’s statement will be the key to deciding the Aussie’s immediate future:
- If we do see a bit of a pause coming from the RBA for the chance of a rate cut happening in the next two or three months, you may actually see the dollar going the other way.
- It would be probably be 0.4 to 0.5 per cent, now in currency terms that’s a big move, it’s like moving 3 or 4 per cent in a stock. There are so many people positioned for really dovish news out of the RBA that if it’s not there it will go the other way.
- The statement is what to look at, not the cut because the cut has already been like guaranteed. So that’s what I’d be looking at, the statement, and the language used.
It's taken a while, but another tranche of cash from the recent $553 million rights issue by the ASX looks to have found a home.
This morning, market information and data outfit Iress said it is to buy a UK group Avelo for 206 million pounds, which is to be financed through a 2:9 rights issue to raise $210 million.
The ASX said it will take up its entitlement in full stemming from its 20 per cent stake in Iress, which will cost it $39.3 million.
Around $100 million of the ASX raising was to fund 'growth initiatives' with the balance to help strengthen the balance sheet of its ASX Clear unit.
Sony has rejected a proposal from activist shareholder Daniel Loeb to spin off part of its entertainment business, arguing it could still squeeze synergies from its marriage of content and hardware while promising greater disclosure.
Sony's decision could end a three-month effort by Loeb's Third Point LLC hedge fund to convince the company to sell as much as a fifth of its money-making entertainment arm - movies, TV and music - to free up cash to revive the electronics business.
"Sony's board of directors has unanimously concluded that continuing to own 100 per cent of our entertainment business is the best path forward and is integral to Sony's strategy," Sony CEO Kazuo Hirai said in a letter to Loeb, which was released by the company.
Loeb, who owns around 7 per cent of Sony through shares and cash-settled swaps, has called the entertainment division poorly managed. He also wanted to make it more transparent and accountable.
Sony's shares fell as much as 5.5 per cent today morning after the announcement but market players said the drama may not be over.
Gold erased early gains today struggling to stay above $US1,300, as strong global economic data dented its safe-haven appeal and physical buying in top consumers India and China remained subdued.
The metal rose early in Asian trading on a weaker US dollar but failed to find support amid lacklustre demand in China, the second biggest gold buyer. Losses were exacerbated by technical selling once the price fell below $US1,300.
Spot gold was down 0.6 per cent at $US1,295.91 an ounce, hovering near a two-week low.
"Once we break below $US1,300 and then $US1,295, it could go all the way to $US1,280," said one precious metals trader in Hong Kong. "There is nothing much to hold it up today as we have seen strong data, and physical demand is quiet."
Growth in the US services sector rebounded from a three-year low, data showed overnight, while British businesses boomed and activity at euro zone companies expanded, albeit modestly, in July for the first time in 18 months.
We've had a quick chat to Macquarie Research's Gabby Hajj on why their economic team is expecting the cash rate to fall to about 2 per cent by the end of this year - through rate cuts today and in October and November.
Hajj said according to their estimations, mining investment peaked in the fourth quarter of last year. With mining investment accounting for about two-thirds of growth in Australia over the past few years, a fall in investment means that the other one-third of the economy has to pick up the slack, Hajj said.
"That's about a 1 to 1½ per cent growth rate," said Hajj about the remaining one-third of the economy. "And that's tremendously sub-trend."
"So if the RBA is serious about supporting Australia through this transition process, then it will have to substantially ease policy further."
At the same time, Hajj said households (this was also raised by RBA governor Glenn Stevens in a Sydney speech last week) were not consuming at the same levels as before when interest rates were lowered, meaning one rate cut would not have the same expansionary impact.
Meanwhile, both political parties were "[keeping] the fiscal tap closed", Hajj said.
Weaker than expected trade balance data has pushed the ASX further into negative territory, analysts say.
The market is down, down 0.3 per cent, following the release of the trade figures, which showed a $602 million surplus for June. Economist had been expecting $800 million.
The big miners knocked the market deeper into the red, with BHP down 0.9 per cent and Rio off 0.1 per cent.
Evan Lucas, market strategist at IG Markets, said the two miners were already slightly off and the trade balance figures had enhanced the decline.
‘‘It would suggest that iron ore and any form of mining products maybe be a little bit softer than previously as expected,’’ Mr Lucas said.
The top four banks were also down, between 0.4 and 0.8 per cent.
‘‘The banks were always going to be slightly weak today,’’ Mr Lucas said.
‘‘They are trading at fairly high multiples with what most analysts are suggesting. The fact that we could also be getting, and should be getting, a lower interest rate environment come 2.30pm, is just another reason to maybe take profit considering that you are not getting a huge margin in terms of your dividend yield that were probably about four months ago’’.
Analysts have taken the scalpel to their forecasts for Virgin Australia in the wake of its earnings downgrade yesterday
Citi analyst Anthony Moulder cut his recommendation on Australia’s second-largest airline from ‘‘neutral’’ to ‘‘sell’’, pointing out the ‘‘many challenges’’ facing Virgin management.
‘‘We see the result as confirmation that management has struggled to effectively implement the number and complexity of the changes to the business,’’ he said.
Credit Suisse analyst Nicholas Markiewicz retained his ‘‘outperform’’ rating but said the spotlight could turn to funding in the event that Virgin does not reap the benefits of its so-called transformation.
‘‘Should planned transformation benefits not materialise, there is the chance an equity raising could be the end outcome,’’ he said.
He lowered his valuation on Virgin from 52 cents to 49 cents a share.
CIMB analyst Mark Williams downgraded its recommendation on Virgin a week ago to ‘‘underperform’’ due to concerns about its earnings outlook.
Following the profit warning yesterday, he has lowered his expectation for underlying pre-tax profits to a loss of $41 million.
Here's a bit more on what economists are expecting in terms of further interest rate cuts this year.
While the market is fully priced in for a 25 basis points cut today, several economists are expecting the Reserve Bank to ease again later this year as the economy continues to soften amid a rebalancing of the economy towards the non-resources sector.
Economists from CIMB, Goldman Sachs, JP Morgan, NAB, Nomura, RBC Capital Markets, Standard Chartered and Westpac expect the cash rate to fall to 2.25 per cent by the end of this year.
Macquarie Research's economists go one step further and expect the cash rate to fall to 2 per cent by year's end.
Dairy giant Fonterra was hit by fresh infant formula recalls in China and Hong Kong today, while New Zealand's government fretted that the widening contamination scare would prompt China to extend a ban on whey protein powder to other dairy products.
Government officials rapped Fonterra, the world's biggest dairy exporter, for dragging its feet in identifying whey protein products containing a bacteria which can potentially cause botulism.
New Zealand Trade Minister Tim Groser said there was a risk that China, a major importer of New Zealand dairy ingredients including powder used in infant formula, may block more products.
"So far, (there has been) very limited action. But this is likely to change, and it would change in the direction of wider, not narrower," Groser said.
There have been no reports of illness resulting from the affected products so far, but the contamination caused by a dirty pipe at one of Fonterra's New Zealand plants has damaged the country's "clean green" image and threatens to scar its dairy export trade.
Shares in asthma app developer iSonea have jumped as much as 10 per cent after it gained regulatory approval to start selling the technology next month.
The biotech’s stock is currently up 7.5 per cent at 64.5 cents, continuing its meteoric run on the ASX, in which it has vaulted almost 580 per cent since April when it was trading just below 10 cents.
Chief executive Michael Thomas said it would introduce the smart phone app to the market sometime in September. The Therapeutic Goods Administration approved the app, which is designed to monitor the symptoms of people with asthma.
It measures a patient’s wheeze rate, with the breath sound uploaded to a cloud, where it can be accessed by a doctor who can advise on the most appropriate treatment.
Pokies king Bruce Mathieson has taken a punt on the technology, spending $7 million to buy 20 million shares last month at 35 cents each. But Mathieson's real jackpot comes from his decision to outlay just $525,000 and snap up 10.5 million shares at just 5 cents each in a November rights issue.
Shares in asthma app developer have surged almost 580 per cent since April
The local market isn’t the only one under pressure, with Japan’s Nikkei down 1.4 per cent as the yen’s strength weighs on stocks for a second day.
"We blame the yen's rise... we had some blue chip companies like Toyota reporting stellar earnings, but as the yen has strengthened those companies have failed to lift the market and we missed a rally," says Yoshiyuki Kondo, a strategist at Daiwa Securities.
Sony is one of the notable decliners, falling 3.5 per cent and was the third most traded stock after it rejected proposals from activist shareholder Daniel Loeb of Third Point to spin off a part of its entertainment business.
"I think the chances that Third Point will sell its shares are slim, although the market seems to be reacting to that slim chance today. A fall in Sony shares from this particular news should be limited," says Makoto Kikuchi, chief executive of Myojo Asset Management, adding that the hedge fund may yet appeal directly to Sony shareholders next June, a large number of whom are foreign investors.
Australian capital city house prices rose 2.4 per cent in the June quarter, official data showed.
That followed a rise of 0.8 per cent in the March quarter.
In the year to June, the house price index rose 5.1 per cent, the Australian Bureau of Statistics said on Tuesday.
Economists had expected a rise of 1.0 per cent for the June quarter.
Here how the individual markets performed:
HOUSE PRICES Q/Q Y/Y
Weighted average +2.4 +5.1
Sydney +2.7 +6.1
Melbourne +2.4 +3.3
Brisbane +1.9 +3.7
Adelaide +0.3 +0.6
Perth +3.4 +11.0
Hobart -1.0 +1.2
Darwin +2.9 +7.7
Canberra +1.0 +2.6
Australia’s trade balance has stayed in the black, with a surplus of $602 million in June, official figures show.
That followed a surplus of $507 million in May, the Australian Bureau of Statistics said on Tuesday.
Economists had expected a surplus of $800 million in June.
During the month, exports fell 1.0 per cent, while imports fell 2.0 per cent, the ABS said.
Job advertisements have fallen for the fifth-straight month in July and are 19 per cent below their levels a year ago, a private monthly survey has found.
The ANZ job ads series, which is seen as one forward indicator for employment, declined by 1.1. per cent for the month after a revised 1.6 per cent fall in June. Job ads were 8 per cent lower than at the start of the decline in February.
"The continuing trend decline in advertising is consistent, unfortunately, with a further modest rise in the unemployment rate over coming months," ANZ's chief economist for Australia Ivan Colhoun said.
Online job ads fell 0.9 per cent last month, while jobs ads in newspapers - which have been affected by some structural changes in the market - fell 6.8 per cent.
The continued slide in job advertisements came two days before the Bureau of Statistics releases its jobless rate for July. Economists forecast the unemployment rate to rise to 5.8 per cent from 5.7 per cent in June, with 6000 jobs added.
ANZ job ads series ... declined for the fifth-straight month in July. Photo: ANZ
Famed auction house Christie's said overnight it had been hired by Detroit to appraise part of the Detroit Institute of Arts' collection as the city looks for ways to pay at least $US18 billion ($20.2 billion) in debt and unfunded liabilities after applying for bankruptcy protection in July.
Christie's said in a statement that it would advise the city on how to realize value for the art without selling it.
"The City must know the current value of all its assets, including the city-owned collection at the DIA," Emergency Manager Kevyn Orr said in a statement on Monday. "There has never been, nor is there now, any plan to sell art."
The possible sale of art from the 60,000-piece collection has drawn criticism. The museum has said the art cannot be sold because it is held in a charitable trust for the people of Michigan, a position backed by state Attorney General Bill Schuette.
BusinessDay's Adele Ferguson is on CBA and ASIC's case again:
One of the whistleblowers who tipped off the Australian Securities and Investments Commission about a scandal inside Commonwealth Bank's financial planning arm has described the regulator's submission to a Senate inquiry as ''inadequate'', full of spin and riddled with excuses.
Jeff Morris, who contacted ASIC in October 2008 about a ''high-level conspiracy'' inside the bank's financial planning division (CFPL), said after reading ASIC's submission his conclusion was that the regulator was full of sleep-walkers.
He says despite ASIC's admission that it could have acted quicker and been more transparent in terms of its dealings with the whistleblowers, he felt let down as there was no mention of protection for whistleblowers.
''That's probably because, in reality, there is none. They left me to negotiate my own exit from CBA and when I raised a concern about death threats I believed had been made, I was told by my ASIC contact in a rather offhand manner, 'It's probably bullshit but if you're worried, go to the police.'''
Bell Potter analyst Charlie Aitken has taken an interesting look at what investors should do with their money ahead of an expected cut to the cash rate by the Reserve Bank today.
Aitken makes the case that if the cash rate falls to a historic low, investors should respond to low deposit and borrowing rates by moving their money away from cash into a large capital equity like Telstra.
By using a combination of a cash rate of 2.5 per cent, a top individual marginal tax rate of 45 per cent, a company tax rate of 30 per cent, a super fund tax rate of 15 per cent, a super fund in pension phase tax rate of 0 per cent and CPI 2.50 per cent per year, after tax returns from cash could be 0 per cent at best and minus 1.125 per cent at worst, he said in a research note today.
In contrast, Aitken says, if the other taxes are held constant, but the cash approach is switched to a Telstra 2014 financial year dividend of 30 cents fully franked, after tax real income returns could be 6.07 per cent at best and 2.21 per cent at worst.
"When the fear of no investment income meets the fear of missing out, you get big risk asset price moves. This coincides with a period where I believe the level of cash being held can only head one way, down, and the level of confidence in the broader business and household sector can head only one way, up," Aitken writes.
"The cash bubble is going to burst."
Below you can see how Telstra and CBA have risen as the cash rate has made its way down.
We've all heard by now that markets and economists are expecting the Reserve Bank to ease the cash rate by 25 basis points today.
But there are some in the market (about 5 per cent) that believe the RBA might slash rates by 50 basis points.
ANZ analysts said such a move by the central bank was unlikely, pointing to the circumstances during which it last eased by 50 basis points.
"The bank has moved by more than 25 basis points n only two "sets" of occasions over the past 10 years. Last year, an official cash rate cut of 50 basis points as implemented to bring about a 25 basis points cut in lending rates after funding cost pressures had resulted from a number of out of cycle rate rises by banks. This situation is not currently present.
"Before that, it was back to the financial crisis, a period when the economic climate was deteriorating extremely quickly and interest rates were a long way from where the Bank believed they needed to be. Again, this is not the case at the current time."
The Washington Post has agreed to sell its newspaper assets, including its flagship daily, to Amazon founder Jeff Bezos for $US250 million ($280.6 million).
The move comes as newspapers face unprecedented challenges with declines in advertising revenue and readership.
Bezos is making the purchase as an individual and Amazon is not involved, the Post said
The stunning announcement came just days after the New York Times sold the Boston Globe newspaper for just $US70 million to the owner of the Boston Red Sox baseball team, and underscored the desperation of the US newspaper industry for new cash support to survive the rapid transition of the business to the internet.
Washington Post chairman and chief executive Donald Graham, whose family owns the paper, said it would be better served with another owner.
A quick change in direction and the general market is down. The ASX200 is now down 8.2 points, or 0.2 per cent, at 5103.1.
Looking at the sectors:
- Consumer discretionary: -0.5%
- Consumer staples: -0.4%
- Energy: -0.8%
- Property trusts: +0.9%
- Industrails: +0.4%
Hearing implant manufacturer Cochlear has posted a full-year net profit of $132.6 million, down 16 per cent from a year earlier.
Its total revenue was also down 3 per cent, to $752.7 million.
The company warned the market in June that its net profit would be lower than expected, due to weaker full-year sales.
However implant sales were up 16 per cent.
The market had been expecting a range of between $130 million to $135 million.
Cochlear does most of its business in the US and has been struggling to cope with the slowdown in growth in that market.
Shares have opened 0.3 per cent higher at $59.38.
The market has opened flat, with the benchmark S&P/ASX200 adding just 2.1 points to 5113.4. The broader All Ords has risen 2 points to 5095.8.
The Aussie could come under further pressure against the greenback if the Reserve Bank leaves the door open for further easing in the year ahead.
The RBA is widely tipped to cut its cash rate by 25 basis points to a record low 2.5 per cent when its board meets today.
The Australian dollar dangled precariously near a fresh 3-year low at 89.15 US cents in overnight trade. A break there could see the Aussie target the August 2010 low of 87.70 US cents, said David Song, a currency analyst at DailyFX
"We may see a sharper selloff in the AUD/USD should the RBA keep the door open to further rate cuts in the coming months," Mr Song said
"The central bank may retain a dovish tone for monetary policy throughout 2013 as China - Australia's largest trading partner - faces a more pronounced slowdown and continues to face a risk for a hard landing."
The world’s biggest metals market, the London Metal Exchange (LME), and American banking giant Goldman Sachs are being sued over alleged anti-competitive and monopolistic behaviour concerning aluminium storage, the Hong Kong stock exchange says.
The suit was filed in a US district court in the state of Michigan on August 1 by aluminium company Superior Extrusion.
According to a Sunday statement released by the Hong Kong Exchanges and Clearing, which bought LME last year, the Michigan-based plaintiff accuses LME and Goldman Sachs of ‘‘anti-competitive and monopolistic behaviour in the warehousing market in connection with aluminium prices’’.
The exchange said that after an initial assessment made by LME’s management ‘‘the suit is without merit and LME will contest it vigorously’’.
Goldman Sachs also said, in a statement, it would vigorously contest the accusations which it called without foundation, noting that ‘‘aluminium prices are down 40 per cent from their peak in 2006’’.
Engineering and mining contractor Downer EDI got the reporting season for its sector off to a strong start, posting a year to June net profit of $203.98 million up from $107.51 million a year earlier.
Earnings a share reached 45.7 cents up from 23.7 cents.
The strong recovery in earnings was booked on revenue of $8.4 billion up from $7.9 billion.
The final dividend has been raised to 11 cents from 10 cents a share, with the franking credit rising to 7.7 cents from 7 cents. Franking was set to improve further in the year ahead, it said.
At year end, Downer had $19 billion of work in hand. It said the results were a good outcome, despite difficult market conditions.
Downer has flagged revenue losses of as much as $600 million in its mine services division in the year ahead, reflecting contract losses coupled with clients moving aggressively to cut costs.
In economic news on Tuesday, the Reserve Bank of Australia holds its monthly board meeting and makes it cash rate decision.
The Australian Bureau of Statistics releases June’s international trade in goods and services figures and the house price indexes for eight capital cities for the June quarter.
Also due out is the ANZ job advertisements series for month just ended.
The Australian market looks set to open lower following mixed performances on international markets overnight.
The September share price index futures contract was down eight points at 5054.
Here's what you need2know this Tuesday morning:
- SPI futures down 8 points
- AUD fetching 89.31 US cents, 87.76 yen, 67.36 euro cents, 58.2 pence
- In Europe, Eurostoxx -0.1%, FTSE100 -0.4%, CAC +0.1%, DAX -0.1%
- In the US, Dow Jones -0.3%, S&P500 -0.2%
- Gold slips to $US1303.15 an ounce
- Oil down to $US106.47 per barrell
- Iron ore up to $US130.20 per tonne