Stocks edge higher despite rates news

THE sharemarket closed marginally firmer yesterday despite slipping in late trade after the central bank kept interest rates on hold.

By InvestSMART · 4 Apr 2012

By InvestSMART ·
4 Apr 2012

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THE sharemarket closed marginally firmer yesterday despite slipping in late trade after the central bank kept interest rates on hold.

The S&P/ASX 200 Index rose 7.7 points, or 0.18 per cent, to 4337.

The market opened firmer, buoyed by positive US manufacturing data and higher commodity prices, but fell after the Reserve Bank announced it was keeping the cash rate on hold at 4.25 per cent.

"It seems some investors might have been holding out for a rate cut today," said IG Markets market strategist Stan Shamu. "The central bank certainly sounds like it is prepared to cut rates should demand conditions significantly weaken provided inflation is within target."

The session's outperformer was the telecommunication sector. Telstra put on 6?, or 1.8 per cent, to $3.33 as investors parked their funds in the high-yielding company. TPG Telecom rose 4?, or 2.2 per cent, to $1.84 while Optus-owner SingTel inched up 1? to $2.40.

Among the big miners, BHP Billiton gained 6? to $35.18, Rio Tinto was up 60? at $66.79 and Fortescue Metals rose 6? to $6.01.

ANZ was the only one of the big four banks to backtrack, losing 7? at $22.99.

Metcash fell 20?, or

4.7 per cent, to $4.10 after the supermarket owner and grocery wholesale said it would axe almost 10 per cent of its workforce as it struggles with the price war between Coles and Woolworths.

Coles owner Wesfarmers was up 8? at $29.99 and Woolworths finished 6? firmer at $25.70.

Shareholders in Transfield Services are bracing for an expected profit downgrade from the construction and maintenance company. Transfield's shares were placed in a trading halt on Tuesday and last traded at $2.49 as the company revealed it was carrying out a review of its businesses.

Steel maker and iron ore miner OneSteel which yesterday unveiled its new corporate name, Arrium eased half a cent to $1.27.

Norton Gold Fields jumped 5?, or 27 per cent, to 23.5? after its biggest shareholder, China's Zijin, launched a $229 million takeover.

The spot gold price was up $US9.42 at $US1678.67 an ounce at the close of Sydney trade. However, Newcrest, Australia's biggest gold producer, lost 31?, or 1.1 per cent, to $29.19.

Market turnover was

2.12 billion shares worth $4.64 billion, with 506 stocks up, 472 down and 411 steady. The June share price index futures contract was up

9 points at 4342 points at the close, with about 30,000 contracts traded. AAP

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Frequently Asked Questions about this Article…

How did the ASX 200 react after the RBA kept the cash rate on hold?

The S&P/ASX 200 closed a touch higher, rising 7.7 points (0.18%) to 4,337. The market opened firmer on positive US manufacturing data and stronger commodity prices but slipped in late trade after the Reserve Bank kept the cash rate on hold at 4.25%.

What did the Reserve Bank’s decision to hold interest rates mean for investor sentiment on the ASX?

Investors appeared to have been waiting for a rate cut; the RBA’s hold prompted some late selling. IG Markets strategist Stan Shamu noted the central bank sounded prepared to cut rates if demand weakens and inflation is within target, which may have tempered market moves.

Which sectors and stocks outperformed on the day and why should investors notice them?

Telecommunications led the winners as investors favoured high-yield names. Telstra rose to $3.33, TPG Telecom to $1.84 and Optus-owner SingTel to $2.40. Large miners also firmed, with BHP at $35.18, Rio Tinto at $66.79 and Fortescue at $6.01—moves tied to firmer commodity prices.

What happened with Metcash and how could supermarket price wars affect investors?

Metcash fell to $4.10 after announcing it would cut almost 10% of its workforce as it struggles with the price war between Coles and Woolworths. The report also showed Wesfarmers (Coles owner) at $29.99 and Woolworths at $25.70—highlighting sector pressure and operational risks for suppliers and wholesalers.

Why was Transfield Services placed in a trading halt and what should shareholders be aware of?

Transfield Services was placed in a trading halt and last traded at $2.49 as the company carried out a review of its businesses. Shareholders were bracing for an expected profit downgrade, so a halt signaled potential material news that investors should monitor closely.

Did any companies announce rebranding or name changes that investors should note?

Yes. Steel maker and iron ore miner OneSteel unveiled its new corporate name, Arrium, and its shares eased slightly to $1.27. Rebrands can accompany strategic shifts, so investors may want to follow subsequent company updates.

What takeover activity affected mining stocks and how did the market respond?

Norton Gold Fields’ biggest shareholder, China’s Zijin, launched a $229 million takeover. Norton jumped sharply (the article reports a strong rise of about 27%) after the bid—illustrating how takeover offers can produce big short-term moves in smaller miners.

How did changes in the gold price impact Australian gold producers like Newcrest?

Spot gold rose by about US$9.42 to US$1,678.67 an ounce, but Newcrest—the country’s largest gold producer—fell about 1.1% to $29.19. That shows gold price moves don’t always translate immediately into higher share prices for producers.