Slashed cash rate buoys sharemarket
A slight decline in the US unemployment rate also contributed to the buoyant mood, as the dollar fell to an 11-month low of 100.47 US cents early on Friday.
For the week, the benchmark S&P/ASX 200 rose 76.6 points, or 1.5 per cent, at 5206.1 points, while the broader All Ordinaries Index jumped 85.7 points, or 1.7 per cent, at 5191.1 points.
The RBA surprised some economists this week when it cut the cash rate by 25 basis points to 2.75 per cent.
It is the lowest the cash rate has been in decades, as the central bank tries to help rejuvenate non-mining parts of the economy.
The RBA's statement on monetary policy, released on Friday, cut its inflation forecast by three-quarters of a percentage point to 2.25 per cent for the year to June.
"There was very little guidance on the future direction of rates," St George economist Janu Chan said.
"However, the language used suggests a shift to a more neutral stance. Additionally, the few changes to the RBA's assessment on the global and domestic economy suggest that it is not poised to cut rates again immediately."
On Friday, banking stocks finished in negative territory despite the bourse closing at the highest point since June 2008.
Building products supplier Boral was down 17¢, at $4.50. With no sign yet of improvement in the depressed housing sector, the industry could benefit from another interest rate cut, Boral said.
Billabong shares are in a trading halt, last trading at 45.5¢, ahead of an update on its potential takeover.
Coca Cola Amatil lost $1.50, at $13.50, after it said the Northern Territory's cash-for-containers recycling scheme was old-fashioned and inefficient and that it would increase the price of soft drinks.
Caltex Australia rose $1.11, at $22.21, after the company's first-quarter profit jumped almost 80 per cent. But the company said refiners' margins would likely be squeezed in the future as capacity in Asia and the Middle East grew.
Leighton Holdings rose $1.10, at $20.11. The construction giant still expects to make a full year profit of up to $600 million after what it said was a pleasing first quarter.
Mirvac Group rose 3¢ at $1.745. It said it was on track to meet its full-year financial guidance after a review of its business.
National Australia Bank slipped $1.27, at $32.47, after it joined its wealthy rivals with a $2.9 billion, six-month profit.
Ten Network Holdings gained 1¢, at 32¢, despite Cricket Australia reportedly launching legal action against its long-term commercial television rights holder, the Nine Network, over its failure to broadcast domestic cricket.
News Corporation rose $2.05, at $33.00. Its Australian newspapers continue to weigh on earnings.
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The market rallied after the Reserve Bank cut the cash rate by 25 basis points to 2.75% and the Australian dollar weakened to an 11‑month low (about 100.47 US cents). A slight fall in US unemployment and a boost to big miners from the weaker dollar also helped the S&P/ASX 200 and the All Ordinaries finish the week higher.
The RBA's surprise 25bp cut to a historic low of 2.75% lifted investor sentiment, but its statement trimmed the inflation forecast to 2.25% for the year to June. Economists noted the RBA gave little guidance on future moves, signalling a shift towards a more neutral stance and not appearing poised to cut rates again immediately.
Banking shares finished lower even as the bourse hit its highest level since June 2008. For example, National Australia Bank slipped $1.27 to $32.47 after reporting a $2.9 billion six‑month profit, showing that individual bank results and sector factors weighed on bank stocks.
Boral fell 17¢ to $4.50 amid a still‑depressed housing sector, saying another rate cut could help. Leighton Holdings rose $1.10 to $20.11 and reiterated it still expects up to $600 million full‑year profit after a pleasing first quarter. Mirvac gained 3¢ to $1.745 and said it is on track to meet its full‑year financial guidance after reviewing its business.
Billabong shares are in a trading halt, with the last trade at 45.5¢, pending an update on a potential takeover.
Coca‑Cola Amatil fell $1.50 to $13.50 after criticising the Northern Territory's cash‑for‑containers recycling scheme as old‑fashioned and inefficient, saying it would increase the price of soft drinks.
Caltex Australia rose $1.11 to $22.21 after reporting a near 80% jump in first‑quarter profit. The company warned, however, that refiners' margins could be squeezed in future as capacity grows in Asia and the Middle East.
Ten Network Holdings gained 1¢ to 32¢ despite reports Cricket Australia may take legal action against Nine Network over domestic cricket broadcasts. News Corporation rose $2.05 to $33.00, although the article notes its Australian newspapers continue to weigh on earnings.
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