The Australian share market rallied today, surging at open and closing 1.4 per cent stronger. Equities finished just off session highs after the Reserve Bank of Australia (RBA) moved in line with expectations and cut rates.
The S&P/ASX 200 index gained 59 and to close at 4,044. On the futures market the SPI is 56 points higher.
Economic news
As expected the Reserve Bank of Australia has cut the nation’s official interest rate for the second straight month, slicing off 25 basis points at its June board meeting. Australia’s benchmark interest rate now sits at 3.5 per cent after a cut of 50 basis points last month, amid concerns the domestic economy is being impacted by a global slowdown.
The Australian Industry Group and Commonwealth Bank of Australia’s (ASX:CBA) Australian Performance of Services Index increased 3.9 points to 43.5 points in May, but still remained below the 50-level that indicates a contraction in activity.
Company news
Bank of Queensland Limited (ASX:BOQ) has become the first bank to cut rates following the Reserve Bank’s 25 basis point cut this afternoon. The Brisbane based region lender has lowered its standard variable rates on its home and business loans by 20 basis points. CEO Stuart Grimshaw says competition for deposits is at an all-time high but the RBA is trying to encourage consumers to spend and the bank is pleased to assist. Shares in Bank of Queensland rose 3.48 per cent today, closing at $6.55.
Shares in Qantas Airways Limited (ASX:QAN) closed at an all time low after forecasting its underlying profit will fall up to 90 per cent in the 2012 financial year. Australia’s biggest airline has blamed Europe’s financial woes, rising fuel costs, a strong Australian dollar and its domestic expansion for the anticipated profit drop. Shares in Qantas dropped 18.66 per cent following the news, closing at a record low of $1.16.
Middle Eastern airline Etihad has acquired a 3.96 per cent stake in its strategic alliance partner Virgin Australia Holdings Limited (ASX:VAH).
Iron ore developer Sundance Resources Limited (ASX:SDL) its suitor, China’s Hanlong Mining, and government representatives have agreed to the key terms of the Mbalam Iron Ore Project Convention.
Gas developer Dart Energy Limited (ASX:DTE) has received government regulatory approvals to drill its proposed Fullerton Cove pilot wells in New South Wales.
Telstra Corporation Limited (ASX:TLS) has confirmed it is in talks with Vodafone New Zealand to explore the potential sale of its New Zealand subsidiary, Telstra Clear.
Best and worst performers
The best performing sector was Energy rising 327 points to close at 12,411.
The worst performing sector was Telco Services, losing 4 points to close at 1,251 points.
The best performing stock in the S&PASX 200 was Ramelius Resources Limited (ASX:RMS), rising 18.09 per cent to close at $0.56. Shares in Beach Energy Limited (ASX:BPT) and Challenger Limited (ASX:CGF) also closed higher.
The worst performing stock was Qantas Airways Limited (ASX:QAN), dropping 18.66 per cent to close at $1.16. Shares in Integra Mining Limited (ASX:IGR) and Fairfax Media Limited (ASX:FXJ) also closed lower.
Commodities
Gold is trading at $US1,617 an ounce.
Light crude is $0.73 up at $US84.71 a barrel.
The Australian dollar
The Australian dollar is buying 97.99 US cents.