THE sharemarket closed 0.6 per cent lower yesterday, with investors starting to hope that the central bank would next month cut interest rates for the first time in a year.
The local market opened almost 1 per cent down on a weak lead from Wall Street overnight. By the close yesterday, the benchmark S&P/ASX 200 Index was down 24.9 points, or 0.64 per cent, at 3872.1.
Bell Potter senior adviser Stuart Smith said the market began to turn around after the Reserve Bank said as was widely expected that it would hold interest rates steady for the 11th consecutive month.
There was now speculation that the RBA's comments meant the cash rate could be cut before the end of the year, he said.
But Mr Smith said lower than expected trading volumes yesterday, after a public holiday on Monday in New South Wales, the ACT and South Australia, had not helped shares, despite enormous values, amid investor uncertainty.
Turnover was 2.19 billion shares changing hands for $5.49 billion.
"We are spectating, like sitting on the dock of the bay, watching the tide come in and go out," he said.
All sectors had lost ground at the close, with about six out of 10 stocks falling.
Gold rose 2 per cent on Monday and was on track for its first three-day winning streak in a month, as bullion appeared to have regained its haven status. The spot price of gold in Sydney was $US1670.80 an ounce, up $US36.92 from Monday's close of $US1633.88.
Gold stocks were among the only green spots on the market, with Australia's biggest goldminer, Newcrest, up 34?, or 1 per cent, at $33.90 and Kingsgate rising 18?, or 2.6 per cent, to $7.06.
Telecoms were hit hardest at the close, down 1.2 per cent, despite being the outperforming sector for most of the day. Telstra fell 4?, or 1.3 per cent, to $3.
All the major retail banks ended lower, except ANZ, which rose 4? to $18.98.
The engineering sector had a mixed day. Toll-road owner ConnectEast was steady at 54.5? after Horizon Roads' $2.17 billion takeover received legal approval.
Downer EDI fell 5? or 1.8 per cent, to $2.75, despite being awarded a $142 million contract to do electrical work on a resource project in Western Australia's Pilbara.
Leighton Holdings fell 11?, or 0.6 per cent, to $18.17 on the news that workers will not return to the construction site of Australia's longest road tunnel, the Brisbane Airport Link, until at least tomorrow. They are demanding
beefed-up safety after a man's death. AAP
Frequently Asked Questions about this Article…
How did the ASX and the S&P/ASX 200 perform in the trading session described in the article?
The article says the sharemarket closed about 0.6% lower, with the S&P/ASX 200 down 24.9 points to 3,872.1. Most sectors lost ground and roughly six out of 10 stocks fell.
What did the Reserve Bank of Australia (RBA) decision mean for investor expectations and interest rate outlook?
According to the article, the RBA held interest rates steady for the 11th consecutive month, which was widely expected. That pause prompted speculation that the cash rate could be cut later in the year, and investors were hoping for an eventual rate cut.
Why were trading volumes lower and how did that affect market activity?
The article reports lower-than-expected trading volumes partly because of a public holiday in New South Wales, the ACT and South Australia. Reduced turnover — 2.19 billion shares changing hands for $5.49 billion — contributed to hesitant market behaviour, with many investors described as "spectating."
What was driving the gold price and how did gold-related stocks perform?
Gold rose about 2% on the Monday covered by the article and was tracking for a three-day winning streak. The spot price in Sydney was quoted at US$1,670.80 an ounce (up US$36.92 from the prior close). Gold stocks were among the few winners: Newcrest traded at $33.90 and Kingsgate at $7.06, both higher on the day.
Which sectors underperformed, and how did Telstra fare in this market session?
Telecommunications was the hardest-hit sector at the close, down around 1.2% according to the article. Telstra fell and was quoted at $3 at the close of trading.
How did the major retail banks perform, and what happened with ANZ shares?
The article notes that most major retail banks finished lower, with ANZ the exception — ANZ rose and was quoted at $18.98 by the close.
What were the notable developments in engineering and infrastructure stocks like ConnectEast, Downer EDI and Leighton?
ConnectEast was steady at 54.5 cents after Horizon Roads' $2.17 billion takeover received legal approval. Downer EDI fell to $2.75 despite being awarded a $142 million electrical contract on a Pilbara resource project. Leighton Holdings was weaker, trading at $18.17 after news that workers would not return to the Brisbane Airport Link construction site until at least the next day amid safety concerns following a death.
Does the article suggest everyday investors should buy the dips or wait on the sidelines?
The article describes many investors as "sitting on the dock of the bay"—watching the market and remaining cautious despite apparent value in some stocks. It reports investor uncertainty and lower volumes rather than offering specific buy-or-wait guidance.
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