Investors tense and market fails to bounce
The sharemarket lost ground on Tuesday for the second day in a row, with investors remaining edgy after Monday's global bloodbath.
The benchmark S&P/ASX 200 shed 28 points, or 0.6 per cent, to 4987.4, while the All Ords fell 23 points, or 0.5 per cent, to 5004.4.
Concerns re-emerged on Monday about Europe's financial system after news that bank depositors in Cyprus would be charged a one-off levy to help to pay for a €10 billion ($12.6 billion) bailout.
On Monday, that saw the ASX 200 drop 2 per cent, along with other developed economies' markets. On Tuesday, the market failed to bounce back, despite the global tide of fear ebbing.
A senior market analyst at Ord Minnett, Craig Turton, said he did not think Cyprus was a trigger for "systemic concerns" so it was interesting that the local market lost ground again on Tuesday. "It's a reminder of how ugly Europe is, and how poor the growth outlook is there," he said.
"The bit I find interesting is that in Big Caps Land there's not a lot of value left in the Australian marketplace, so there's not much margin for safety there, and now you're starting to see [global] volatility pick up.
"I just wonder what this has done to investor psyche when there's not that margin for safety there."
The minutes of the RBA's March board meeting, released on Tuesday, said interest-rate-sensitive parts of the economy continued to show signs of responding to recent rate cuts.
Separately, RBA deputy governor Philip Lowe said lower interest rates were "doing their work broadly as expected", citing higher house prices, as well as improved auction clearance rates.
Dr Lowe said Australians were collectively saving $90 billion more a year than they had in the mid-2000s, which had hurt retailers.
But he said the increase in savings had also helped keep inflation around the middle of the RBA's target range of 2 to 3 per cent, allowing the central bank to cut the cash rate to its equal-lowest on record. The RBA has held the cash rate at 3 per cent at its past two meetings.
Consumer staples were the worst-performing sector on Tuesday, falling 2.15 per cent. Woolworths was down 90¢ at $33.85, while Coles owner Wesfarmers was $1.01 lower at $41.09.
Among miners, BHP lost 14¢ to $34.55 and Rio fell 89¢ to $58.66.