News on the markets was dominated by big bank profits and interest rate cuts yesterday, with financial stocks performing strongly.
But the bourse dropped slightly because investors could not quite shake a negative lead from Wall Street.
The S&P/ASX200 index was down 6.9 points at 4429, while the All Ordinaries index was down 10.3 points at 4494.5.
Analysts suggested trading was quiet ahead of the federal budget next week, with trading volumes low overall.
Much of the focus was on the banks. NAB, ANZ and Westpac all posted their half-year earnings this week. Westpac, the country's second-biggest bank, yesterday reported its smallest increase in first-half profits since 2009 due to competition for deposits putting pressure on margins.
After the Reserve Bank's surprise rate cut, a tussle seemed to break out among the banks yesterday to see who could curry the most favour with customers, or avoid the deepest chagrin, by passing on a percentage of the cut.
Analysts said Commonwealth Bank's decision to pass on 40 basis points was a sign it was taking the fight to NAB, the bank with the lowest standard variable mortgage rate of the majors.
Westpac shares rose 22? to $22.91 and NAB 10? to $25.20. Commonwealth was steady at $52.68, while ANZ fell 16? to $23.64.
New data showed beer consumption had fallen to a 65-year low. The total apparent consumption of alcohol fell for the fourth year in a row. "[But] Aussies aren't cutting back on the drink completely, as consumption of spirits has lifted," said a CommSec equities economist, Savanth Sebastian.
"Perhaps in the current climate, more people are looking for a good, stiff drink."
Wesfarmers fell 17? to $30.57, but Woolworths shares rose 43? to $26.85. Retailer Harvey Norman said pre-tax profit for the first nine months of the financial year fell 25 per cent as sales continued to fall in the three months to March. The stock fell 3? to $2.04.
A number of other retailers also struggled. JB Hi-Fi fell 14? to $9.40, The Reject Shop fell 5? to $11.75 and Billabong fell 6? to $2.54.
With the cash rate sitting on 3.75 per cent, the bond market was firmer after investors fled to safe haven assets following the release of weak economic figures from China and the US.
The June 10-year bond futures contract was trading at 96.480 (implying a yield of 3.520 per cent), up from 96.410 the day before.
The RBC Capital markets fixed income strategist Michael Turner said bond traders were awaiting the European Central Bank's interest rate decision during the offshore session last night, as well as a Spanish government bond auction.
The dollar fell about one-third of a cent to below US103? after the publication of data showing weaker than expected Chinese economic output.
The Reserve Bank releases its quarterly monetary policy statement today.
with AAP
Frequently Asked Questions about this Article…
Why did the ASX200 slip even though big banks posted strong profits?
The ASX200 eased slightly because investors were still influenced by a negative lead from Wall Street and trading volumes were quiet ahead of the federal budget. While financial stocks performed strongly on big bank earnings, overall market moves were muted and the S&P/ASX200 was down at 4,429 that day.
How did Australia’s major banks react to the Reserve Bank’s surprise rate cut?
After the RBA’s surprise cut, banks appeared to compete over how much of the reduction to pass on to customers. Commonwealth Bank chose to pass on 40 basis points, while other majors varied their responses as they tried to protect margins and retain customers.
Which bank share prices moved and what were their reported prices?
On the day covered by the article Westpac shares rose to $22.91, NAB to $25.20, Commonwealth Bank was steady at $52.68, and ANZ fell to $23.64.
What was said about Westpac’s recent profit performance and mortgage competition?
Westpac reported its smallest increase in first-half profits since 2009, with management citing competition for deposits that put pressure on margins. The article highlighted how intense mortgage and deposit competition is affecting bank profitability.
How were Australian retailers performing and which stocks were mentioned?
Retailers were mixed: Wesfarmers fell to $30.57 while Woolworths rose to $26.85. Harvey Norman said pre-tax profit for the first nine months fell 25% and its stock fell to $2.04. Other retailers mentioned that struggled included JB Hi‑Fi at $9.40, The Reject Shop at $11.75 and Billabong at $2.54.
What did the article say about bond markets, yields and the cash rate?
With the cash rate at 3.75%, the bond market was firmer as investors moved to safe-haven assets after weak economic data from China and the US. The June 10-year bond futures contract was trading at 96.480, implying a yield of 3.520%, and bond traders were watching ECB decisions and a Spanish government bond auction.
How did currency markets react to recent economic data?
The Australian dollar fell about one-third of a cent to below US103 (as reported), following weaker-than-expected Chinese economic output, which contributed to risk-off flows and pressure on the currency.
What consumer trends in alcohol consumption were highlighted and why might investors care?
New data showed beer consumption had fallen to a 65-year low and total apparent alcohol consumption declined for the fourth consecutive year, but spirits consumption had risen. For investors, changing beverage trends can affect supermarket and liquor-related retailers and beverage producers mentioned in market coverage.
Call 1300 880 160
Start a chat
Schedule a call
