Market weaker on surprise rate decision
STOCKS closed weaker yesterday after the central bank unexpectedly kept interest rates on hold and both National Australia Bank and Macquarie Group posted results that disappointed the market.
STOCKS closed weaker yesterday after the central bank unexpectedly kept interest rates on hold and both National Australia Bank and Macquarie Group posted results that disappointed the market.The S&P/ASX 200 Index finished down 21.8 points, or 0.51 per cent, at 4274.2.CommSec chief equities economist Craig James said it was no surprise that the sharemarket slumped following the Reserve Bank's decision to keep the cash rate at 4.25 per cent.Mr James said the RBA was waiting on the outcome of Greek debt talks before changing the official rate.Almost all economists and the market were expecting a rate cut of 25 basis points to 4 per cent, following reductions of the same amount in November and December."Lower interest rates would have served to boost the competitiveness of shares and property compared with cash-based investments and bonds," Mr James said."At this stage, we are factoring in a move in May, after the next [Australian] inflation figures," he said.CMC Markets sales trader Ben Taylor said financial stocks took a hit following the RBA's decision because it meant a lack of stimulation to lending demand.NAB said yesterday that higher funding costs were affecting its business. Its shares fell 96?, or 4 per cent, to $23.21.Among the other big banks, ANZ put on 3? to $21.36, Westpac declined 11? to $20.92 and Commonwealth eased 33? to $50.51.Investment bank Macquarie Group warned of a 25 per cent drop in net profit for this financial year amid difficult market conditions. Its stock gave up 20? to $25.90.Among consumer discretionary stocks, Myer was down 4? at $2.07 and David Jones dipped 5? to $2.51.Market leader BHP Billiton, which will release its half-year results today, was down 31? at $37.90 and Rio Tinto retreated $1.29, or 1.8 per cent, to $71.01.Cochlear was up $4.41, or 7.6 per cent, at $62.52 after the bionic ear developer reported a lower than expected net loss of $20 million.Newcrest, which is slated to deliver its first-half results on Friday, slipped 38? to $33.54 in response to a further fall in gold.At the close of Australian trading, the spot gold price was at $US1722.715 an ounce, down $US12.05 from Monday's close of $US1734.77.Market turnover was 1.82 billion shares worth $4.62 billion, with 460 shares up, 528 down and 382 steady.