Benchmark closes flat in wait for leads

THE sharemarket had its slowest day in 2 months yesterday, based on the value of shares traded, as investors waited for the results of key policy meetings in Europe and Britain that were held last night.

By InvestSMART · 6 Jul 2012

By InvestSMART ·
6 Jul 2012

Comments

The lack of investor interest was compounded by a weak lead from Europe, and no lead at all from the US (closed for the July 4 holiday), so the market lacked direction from the opening bell.

The benchmark drifted lower on falls in the material and energy sectors, a response to weaker commodity prices overnight.

The S&P/ASX 200 Index lost 3 points, or 0.07 per cent, closing at 4169.2.

Shareholders stayed on the sidelines waiting to see what would come of policy meetings of the European Central Bank and the Bank of England. The ECB was expected to announce an interest rate cut, and the BoE was expected to unveil a $A76.78 billion stimulus package to help recession-hit Britain.

Unwillingness to buy stocks without knowing the outcome of those meetings meant just $2.9 billion of value passed through the market: the least since the Monday before the Anzac Day holiday ($2.75 billion) this year.

At 5pm, the dollar was trading at US102.68?, down from US102.89? on Wednesday. It reacted only slightly to the release of trade figures that showed a slightly lower than expected trade deficit.

The balance on goods and services was a deficit of $285 million in May, seasonally adjusted, compared with a deficit of $26 million in April.

Economists' forecasts had centred on a deficit of $500 million in May.

ANZ foreign exchange strategist Andrew Salter described the day's trading as one of consolidation.

"The release of the trading figures had a marginal impact and they weren't out of line with market expectations," he said.

The big miners gave up early gains, with BHP Billiton slipping 5? at $32.42 and Rio Tinto losing 29? at $58.68.

The banks kicked the trend, ANZ rising 11? to $22.48, NAB 2? to $23.85, Westpac 22? to $21.75 and Commonwealth 22? to $53.81.

Fairfax was the most heavily traded by volume and 12th highest by value, closing up 0.5? at 58.5?, after Gina Rinehart reduced her stake in the company to 15 per cent.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

Why did the ASX have such a slow trading day?

Trading was light because many investors stayed on the sidelines ahead of policy decisions from the European Central Bank and the Bank of England. A weak lead from Europe and no US lead (the US market was closed for the July 4 holiday) also left the market directionless.

How did the S&P/ASX 200 close and what does that mean for investors?

The S&P/ASX 200 closed at 4,169.2, down 3 points (about 0.07%). That small dip, combined with low turnover, suggests a day of consolidation rather than any strong market trend.

How low was trading volume and why should everyday investors care?

Only about $2.9 billion of value traded — the weakest daily turnover in two months and the least since the Monday before the Anzac Day holiday ($2.75 billion). Low volume can mean wider bid‑ask spreads and less price momentum, so it’s common for investors to be cautious during these sessions.

Which sectors weighed on the benchmark and why?

The materials and energy sectors dragged the benchmark lower, responding to weaker commodity prices overnight. When commodity prices fall, miners and energy firms often see share price pressure.

What happened to the big miners like BHP Billiton and Rio Tinto?

The big miners gave up early gains — BHP Billiton slipped to $32.42 and Rio Tinto closed at $58.68, reflecting the sector weakness linked to softer commodity prices.

How did the major banks perform during the session?

The major banks were a positive on the day: ANZ closed around $22.48, NAB about $23.85, Westpac near $21.75 and Commonwealth Bank at $53.81, helping to offset some of the market's losses.

What did the article say about the Australian dollar and trade figures?

The Australian dollar was trading near US102.68, down from about US102.89. Trade figures showed a seasonally adjusted goods and services deficit of $285 million in May (compared with a $26 million deficit in April), which was smaller than economists' median forecast of a $500 million deficit. ANZ's FX strategist described the day as one of consolidation.

Was there any notable company news that traders focused on?

Yes — Fairfax was the most heavily traded stock by volume and closed around 58.5. The stock was notable after Gina Rinehart reduced her stake in the company to 15 percent.