The stockmarket experienced its second-lowest trading day of the year yesterday by value of shares traded, a fact analysts blamed on the school holidays and tomorrow's Anzac Day break for sidelining traders.
Just $2.65 billion worth of trades were recorded on the ASX200 - the only day the market performed worse this year was January 2, at $1.8 billion.
Analysts said investors were cautious before today's crucial inflation data, but the midweek holiday had scared off the large institutional investors, which kept the bigger trades away.
"This week will be another write-off," Goldman Sachs's Richard Coppleson said, "but [after] this week we should slowly see things pick up."
The benchmark S&P/ASX200 index closed down 14.1 points, or 0.3 per cent, at 4,352.4, while the broader All Ordinaries index similarly fell 14.1 points, or 0.3 per cent, to 4,430.3.
The positive leads from Wall Street and European markets on Friday failed to prevent the local bourse losing ground, with most sectors performing poorly. The falls were led by the materials sector, which ended 0.7 per cent lower, while industrials dropped 0.6 per cent, financials ended flat, and telcos rose 0.6 per cent.
But pockets of strength could be still found in higher-yielding, dividend-paying sectors, including telcos and financial stocks. Commonwealth Bank was up 1? at $50.95, ANZ gained 1? to $23.46 and Westpac gained 4? to $22.14. NAB slipped 11? to $25.08.
Telstra gained 2? to $3.40.
Investors were looking to crucial inflation data to be released today. Analysts forecast the key measure of underlying inflation rose 0.6 per cent in the first quarter, nudging the annual rate down to 2.4 per cent and comfortably within the RBA's long-term target band of 2 to 3 per cent.
"We could see a rally" if the March-quarter consumer price index data comes within expectations, said the Macquarie Equities division director Lucinda Chan.
The Reserve Bank has already indicated it would consider cutting the 4.25 per cent cash rate at its next policy meeting on May 1, providing inflation numbers were tame.
Producer price data released yesterday supported the case for monetary easing, showing the prices of final goods dropped 0.3 per cent in the March quarter, well below analyst forecasts for an increase of 0.5 per cent.
Shares in the diversified conglomerate Wesfarmers slipped 13? to $29.34 after analysts reported that third-quarter sales at its Coles supermarket unit could fall short of rival Woolworths, as shelf prices continue to fall amid heavy discounting.
BHP Billiton was down 18? at $35.32, while Rio Tinto gained 2? to $66.65 and fellow miner Fortescue Metals fell 6? to $5.92.Shares in Spotless Group advanced 2.5 per cent to $2.46 after the business services group said it was still talking with suitor Pacific Equity Partners and was yet to reach a conclusion.
Frequently Asked Questions about this Article…
Why was ASX trading volume so low on the day the article describes?
The article reports the ASX recorded just $2.65 billion worth of trades – the second-lowest trading day this year – and analysts blamed the drop on school holidays and the midweek Anzac Day break sidelining many traders, particularly large institutional investors.
How did the ASX200 and All Ordinaries indexes perform on the low-volume day?
According to the article, the S&P/ASX200 closed down 14.1 points, or about 0.3 percent, at 4,352.4, and the All Ordinaries also fell 14.1 points, or 0.3 percent, to 4,430.3.
Which sectors led the market declines and where were pockets of strength?
The materials sector led the falls (about 0.7 percent lower) with industrials also down (around 0.6 percent). Financials finished flat overall while telcos rose (about 0.6 percent). The article notes pockets of strength in higher-yielding, dividend-paying sectors such as telcos and some financial stocks.
How did major Australian bank shares move during this session?
The article says Commonwealth Bank rose to $50.95, ANZ increased to $23.46, Westpac gained to $22.14, while NAB slipped to $25.08. Despite mixed moves in individual bank shares, the financial sector as a whole finished roughly flat that day.
What happened to major miners and materials companies mentioned in the article?
The article reports BHP Billiton was down to $35.32, Rio Tinto gained to $66.65, and Fortescue Metals fell to $5.92. Overall, the materials sector underperformed and led the market declines on the day.
How were investors reacting to upcoming inflation data and the RBA's policy outlook?
Investors were cautious ahead of key inflation data. Analysts forecast underlying inflation rose 0.6% in the March quarter, taking the annual rate to about 2.4% (inside the RBA’s 2–3% target band). The article notes the RBA has indicated it would consider cutting the 4.25% cash rate at its May 1 meeting if inflation readings are tame, and producer price data showing a 0.3% drop in final goods prices supported the case for monetary easing.
Could inflation data spark a market rally, according to the article?
Yes. The article quotes Macquarie’s Lucinda Chan saying a rally is possible if the March-quarter consumer price index comes in within expectations, since tame inflation could increase the likelihood of RBA easing and boost investor sentiment.
What company-specific news was highlighted about Wesfarmers and Spotless Group?
Wesfarmers slipped to $29.34 after analysts warned that third-quarter sales at its Coles supermarket unit could fall short of rival Woolworths amid falling shelf prices and heavy discounting. Spotless Group advanced to $2.46 after saying it was still in talks with suitor Pacific Equity Partners and had not yet reached a conclusion.
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