The local share market is trading lower at midday ahead of the RBA’s decision on interest rates due this afternoon, with the financial leading the declines.
Wall St and London were closed overnight for public holidays and so provided no direction for the local market today. Investors will look towards the central bank’s rates announcement later today for direction, with the market expecting rates to stay on hold this month.
The S&P/ASX200 index is 39 points weaker at 4,390 and on the futures market, the SPI200’s down 49.
In economic news: The Australian Industry Group/PricewaterhouseCoopers Performance of Manufacturing Index fell 3.5 points to a read of 56.3 in May. Despite the drop the index remains above the 50 mark separating contraction from expansion.
The ABS says retail sales rose 0.6% in April, Government spending rose 3.7% in the first quarter to $75.92 billion (GDP figures are due out on Wednesday), and building approvals dropped 14.8% in April from the month before.
In company news: Junior explorer Cazaly Resources Ltd (ASX:CAZ) has signed a memorandum of understanding with HWE Mining to develop the Parker Range Iron Ore project. The company says it is also in advanced discussions with its preferred rail provider to deliver iron ore to port. Cazaly says the MOU provides the framework for an engineering, procurements, operate and maintain contracting model for the mining and associated contracting required to deliver ore to the railhead. Cazaly says HWE, who is owned by a subsidiary of Leighton Holdings, has the opportunity to acquire a 20% interest in the project. Separately the company has also presented a plan to the Fremantle Port Authority for the delivery of up to 4 million tonnes a year of iron ore to the Port of Kwinana. Shares in Cazaly Resources rose 7.07% to $0.53.
St George Bank, now owned by Westpac Banking Corporation (ASX:WBC), has lifted the interest rate on its online savings account SENSE by 1.25% to 4.85%. According to a Fairfax report, the debt crisis in Europe is making it harder to source funding overseas and so banks are vying for a greater share of the local deposit market. Meanwhile the RBA is to announce its decision on interest rates this afternoon with the central bank widely expected to leave rates on hold this month. Shares in Westpac fell 2.35% to $22.41.
Turning now to market indices: The best performing sector at noon is the Utilities index, up 41 points to 4,073. Shares in APA Group are 2.01% higher at $3.55. Shares in Challenger Infrastructure Fund and AGL Energy are also higher at midday.
The worst performing sector is the Financials excluding Real Estate Investment Trust index, down 78 points to 5,013. Shares in Challenger Financial Services Group lost 2.95% to $3.62, while shares in ASX and Platinum Asset Management are also lower.
Looking to New Zealand and the NZSX50 is steady. Taking a look at the top 4 stocks by turnover: Heading the list is Telecom of New Zealand with stock down 1.05% at $1.88 followed by; Fletcher Building, Westpac, and Sky City Entertainment Group.
To gold and the dollar: Gold is trading at US$1,221.10 an ounce and the Aussie dollar is trading at 83.92 US cents.
