THE sharemarket ended marginally lower yesterday, dragged down by losses in mining and energy shares as worries about growth in the United States and China depressed commodity prices.
However, the market outperformed the Asian region for the second straight session, supported by a weaker Australian dollar, which has boosted the outlook for company earnings.
At the close, the benchmark S&P/ASX200 index was down 5.6 points at 4337.9, while the broader All Ordinaries index was down 9.5 points at 4422.
"Our market has held up well considering the weakness which has plagued international markets," Ben Taylor, a trader at CMC Markets, said.
"While some traders believe we are merely playing catch up from our recent underperformance, other investors believe the reason for resilience is a pending Reserve Bank rate cut next week."
Japan's bourse slipped 0.7 per cent, Hong Kong was down 1.2 per cent and China was off 0.6 per cent.
The local resilience and weaker sentiment in the Asian region gave speculators an excuse to increase bets that Reserve Bank may cut interest rates to 4.00 per cent next week.
A stronger currency has made it hard for manufacturers to compete, denting the earnings of companies with operations in the US and elsewhere.
CMC Markets strategist Michael McCarthy said this week's performance signalled a substantial commitment to Australian equities by investors. "The absolute standout is healthcare," he said. "For the second day in a row it's been the top performing sector and it's been quietly buoyant for the last two weeks."
There was an argument that a recent easing in the dollar was pushing up healthcare stocks with offshore exposures such as CSL, but the strong performance in Sonic Health Care indicated that other factors were at play, he said.
CSL gained $1.15, or 3.3 per cent, to $36.30 yesterday, while Sonic added 9? to $12.52.
Other defensive sectors, including IT, consumer staples, utilities, telcos and property trusts, were also in favour. "That suggests that while we are seeing greater commitment to equities in Australia, it is still taking a very cautious shape," Mr McCarthy said.
Telstra firmed 2? to $3.30, Computershare added 17?, or 1.9 per cent, to $8.97, and Woolworths advanced 23? to $25.64.
Banks and financials, excluding property trusts, posted gains for the sixth consecutive day, with the sector rising 7.5 per cent in the past 15 trading days. Three of the big-four banks advanced but Westpac fell 6? to $21.88. Bank of Queensland plunged 41?, or 5.36 per cent, to $7.24 as investors digested the effect of its capital raising.
Materials and oil stocks underperformed, with BHP Billiton falling 36?, or 1 per cent, to $34.25, and Rio Tinto down 17? to $64.36.
Oil Search led energy stocks lower after finishing 15?, or 2.1 per cent, down at $6.91.
Leighton Holdings slumped $1.59, or 6.7 per cent, to $22.16 after it cut its profit forecast by nearly a third because of further losses from its Brisbane Airport Link and Victorian desalination plant works.
Toll road operator Transurban eased 5? to $5.62 after it confirmed its full year distribution guidance despite a difficult operating environment.
Frequently Asked Questions about this Article…
Why did the Australian sharemarket dip even though the outlook still looks brighter?
The article says the market finished marginally lower because mining and energy shares fell as worries about growth in the US and China pushed down commodity prices. At the same time, a weaker Australian dollar helped the market outperform other Asian bourses and boosted the earnings outlook for some companies, so overall sentiment remained cautiously positive.
How did the ASX 200 and All Ordinaries close yesterday?
According to the article, the benchmark S&P/ASX 200 was down 5.6 points to 4,337.9 at the close, while the broader All Ordinaries index fell 9.5 points to 4,422.
What role is the Australian dollar playing in company earnings and share prices?
The piece notes a weaker Australian dollar has boosted the outlook for company earnings, particularly for firms with offshore exposure. That currency easing has helped lift healthcare stocks like CSL and supported broader investor interest in Australian equities.
Which sectors were outperforming and what does that mean for everyday investors?
Healthcare was the standout sector, with defensive areas such as IT, consumer staples, utilities, telcos and property trusts also in favour. The article suggests investors are returning to equities but in a cautious, defensive way — so everyday investors may want to consider sector balance and defensive exposure when reviewing portfolios.
What happened with bank and financial stocks on the market?
Banks and financials (excluding property trusts) posted gains for a sixth consecutive day and the sector rose 7.5% over the past 15 trading days. The article notes three of the big four banks advanced, but Westpac fell to $21.88 and Bank of Queensland plunged to $7.24 as investors reacted to its capital raising.
How did major miners and energy companies perform and why?
Materials and oil stocks underperformed as commodity prices came under pressure from global growth worries. The article reports BHP Billiton fell to $34.25, Rio Tinto was down to $64.36, and Oil Search led energy stocks lower, finishing down at $6.91.
Were there any notable company-specific moves investors should know about?
Yes. CSL gained $1.15 to $36.30 and Sonic Health Care rose to $12.52, reflecting strength in healthcare. Leighton Holdings slumped after cutting its profit forecast by nearly a third, finishing at $22.16. Transurban eased to $5.62 after confirming full-year distribution guidance. Telstra, Computershare and Woolworths were also mentioned as firming or advancing.
Is the market pricing in an RBA rate cut and what might that mean for shares?
The article says speculators increased bets that the Reserve Bank may cut the cash rate to 4.00% next week, and some traders believe that expectation is part of why the local market has held up. For investors, expectations of a rate cut can support equities — especially defensive and interest-sensitive sectors — but the article reflects only market sentiment rather than a guarantee of policy moves.
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