Miners buoy market as banks lose interest

THE sharemarket closed marginally stronger at a nine-month high yesterday after gains by miners were offset by falls among the big four banks.

By InvestSMART · 3 May 2012

By InvestSMART ·
3 May 2012

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THE sharemarket closed marginally stronger at a nine-month high yesterday after gains by miners were offset by falls among the big four banks.

The benchmark S&P/ASX 200 Index closed up 6.4 points, or 0.14 per cent, at 4435.9.

Investors appeared to take a cautious approach and consolidate Tuesday's gains made in response to the Reserve Bank's decision to lower interest rates by a greater than expected 50 basis points.

"It was quite an underwhelming performance, a bit of a misfire compared to the performance we saw from Wall Street overnight," said CMC Markets senior trader Tim Waterer. "Much of the initial elation from the 50-basis-point cut from the RBA seems to have worn off today."

Mr Waterer said decent manufacturing numbers released in the past 48 hours from several countries, including China, had helped spur the market.

There were falls among the banks as traders waited to see how they would react to the cut in the cash rate.

National Australia Bank was the first to cut its variable home loan rates but by less than the RBA cut, dropping its variable rate by 0.32 percentage points. The other majors are still on the sidelines

National Australia Bank eased 11? to $25.10 while Commonwealth was 17? lower at $52.68 and Westpac retreated 14? to $22.69. ANZ was off 19? at $23.80 after it reported a 10 per cent lift in first-half profit, but said margins in its Australian business were declining.

The resource sector was boosted by stronger commodities prices overnight, including crude oil. BHP Billiton was 28? richer at $36.25 and Rio Tinto added 62? to $66.41.

Bauxite miner and alumina producer Alumina was flat at $1.145 after it said pricing and demand would remain subdued this year as the high dollar continued to pressure the company.

Origin Energy was 23? higher at $13.74 after it struck a deal to supply gas to a joint venture of major energy suppliers.

Woodside Petroleum put on 46? to $36.66 after revealing it had begun shipping LNG at its second Pluto project this week.

APN News & Media was up 0.5? at 84?, as it said its New Zealand media properties were under strategic review and flagged a fall in first-half net profit.

Pallets supplier Brambles was 15? higher at $7.40 after it reported it would meet its full-year profit target.

The release of employment data in the US overnight might affect trading today, Mr Waterer said.AAP

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Frequently Asked Questions about this Article…

Why did the ASX200 close at a nine-month high and what role did miners play?

The S&P/ASX 200 closed marginally stronger at a nine-month high (up 6.4 points to 4,435.9) because gains in the resources sector offset falls in the big four banks. Stronger commodity prices, including crude oil, helped lift mining stocks and buoy the overall market.

How did the RBA's 50 basis point rate cut affect investor sentiment and market trading?

The Reserve Bank's larger-than-expected 50 basis point cut initially sparked gains, but investors took a cautious approach the next day and consolidated those gains. CMC Markets’ Tim Waterer said much of the initial elation had worn off, so trading was more subdued as markets awaited follow-through.

Why were major bank shares weaker despite the RBA rate cut?

Bank shares fell as traders waited to see how each major would respond to the cash rate cut. While National Australia Bank moved to cut its variable home loan rates, other big banks stayed on the sidelines, creating uncertainty about margin impacts and prompting declines in their share prices.

What did National Australia Bank’s home loan rate change mean for borrowers and investors?

NAB was the first major to cut its variable home loan rate, trimming it by 0.32 percentage points — less than the RBA’s 50 basis point cut. For borrowers this meant a partial pass-through of the rate cut; for investors it signaled banks might not fully pass on cuts immediately, which can influence bank margins and share performance.

Which major miners moved the market and what drove their gains?

BHP Billiton and Rio Tinto were notable movers, with BHP trading around $36.25 and Rio Tinto near $66.41. Their gains were driven by stronger overnight commodity prices, including crude oil, which boosted the entire resources sector.

What energy sector developments supported market gains?

Origin Energy rose after securing a deal to supply gas to a joint venture of major energy suppliers, while Woodside Petroleum strengthened after it began shipping LNG from its second Pluto project. Those operational and contract developments helped lift energy stocks.

How did companies like Alumina, APN News & Media and Brambles perform and why?

Alumina was flat at about $1.145, noting pricing and demand would remain subdued this year due to a high Australian dollar. APN News & Media rose after saying its New Zealand media properties were under strategic review and flagging a fall in first-half net profit. Brambles gained after reporting it would meet its full-year profit target.

What international data should everyday investors watch that could affect ASX trading?

Investors should watch global manufacturing data—China’s stronger manufacturing numbers were cited as a positive—and upcoming US employment data. Both sets of data can influence commodity demand, investor risk appetite and ASX trading on any given day.