RBA governor's speech fails to move market
The sharemarket closed flat in a lacklustre session as hints of a cash rate cut next week by the Reserve Bank failed to spark big moves.
The benchmark S&P/ASX 200 Index was up 0.9 points at 5047.2, while the broader All Ordinaries fell 1.6 points to 5026.3.
The market fell in early trading on weaker than expected building approvals, before it moved higher when Reserve Bank governor Glenn Stevens fuelled expectations of an interest rate cut next week.
Business confidence had to improve, he said, and further monetary easing was an option, with a decision to be made at next week's RBA monthly board meeting.
The dollar started falling as he rose to speak, but equities were more subdued, moving from being mildly below Monday's close to slightly up.
CMC Markets sales trader Betty Lam said she was surprised Mr Stevens' comments did not cause more gains. "It has been neither here nor there, probably due to the fact that there has been no real overly convincing data come out from anywhere," she said.
That will change over the next week, with important data, including job numbers, to come from the United States.
Consumer staples were the big losers after Woolworths announced a rise in annual sales to $59 billion, with the market focusing more on the deflationary price war that was forcing it to lift volumes to grow earnings.
Woolworths shares closed down 55¢, or 1.6 per cent, at $33.22 while the owner of rival Coles, Wesfarmers, was down 31¢ at $40.22.
The big four banks recovered from early losses, with ANZ 5¢ lower at $29.59, Commonwealth Bank up 17¢ to $74.03, NAB up 3¢ to $31.19 and Westpac 4¢ better at $30.86.
The dollar fell sharply after Mr Stevens' speech and late on Tuesday was trading at US90.63¢, down from US92.45¢ on Monday.
The futures market is now pricing in a near-90 per cent chance the RBA will cut the cash rate.
In his speech in Sydney, Mr Stevens said there were signs of previous rate cuts working in the economy, but not enough to prevent further cuts.
Easy Forex currency dealer Tony Darvall said the speech gave the dollar a smacking. "Because ... he was so blatant in talking the Aussie down, traders who were already bearish on the Aussie dollar just took it as a free hit," Mr Darvall said.