The Australian share market closed 0.5 down today following the Reserve Bank’s surprise call to leave interest rates steady. Equities opened in the red but rose in anticipation of a 25 basis point rate cut this afternoon. Defying expectations the central bank made no change to Australia’s official cash rate of 4.25 per cent, sending equities into the red and pushing the Australian dollar to six month highs against the US dollar.
The S&P/ASX 200 index shed 22 points to finish at 4,274. On the futures market the SPI is currently 9 points higher.
Economic news
Australia’s central bank has kept Australia’s official interest rate on hold at 4.25 per cent at its first board meeting of 2012. Following cuts of 25 basis points in both November and December last year, the RBA defied the consensus view that rates would be lowered by 25 basis points for the third consecutive time in February. RBA governor Glenn Stevens said today, “With growth expected to be close to trend and inflation close to target the Board judged that the setting of monetary policy was appropriate for the moment”.
Construction activity continued to contract at the beginning of 2012. The Australian Industry Group and Housing Industry Association’s performance of construction index dropped 1.2 points to 39.8 in January. The level below 50 indicates contracting activity.
Company news
Shares in National Australia Bank Limited (ASX:NAB) dipped to one of today’s worst performers despite posting an improved quarterly result and vowing to offer the lowest standard variable rate from all The Big Four banks this year. The bank’s first quarter cash earnings grew 7.7 per cent to $1.4 billion. NAB warned higher funding costs are impacting its business and also launched a review of its struggling UK division. Shares in National Australia Bank closed 3.97 per cent lower today at $23.21.
Macquarie Group Limited (ASX:MQG) has forecast its full year net profit will sink by as much as 25 per cent and flagged job cuts. Australia’s biggest investment bank says job cuts will be more than 10 per cent headcount reduction in terms of the front end of the business. Macquarie delivered a net profit of $956 million in fiscal 2011 which could now fall to about $717 million in the current financial year. Shares in Macquarie Group dipped 0.77 per cent today, closing at $25.90.
Shares in bionic ear maker Cochlear Limited (ASX:COH) jumped to today’s best performer, despite posting a first half $20 million net loss after a product recall. Excluding the product recall first half net profit dipped 8 per cent to $80 million.
Toll road operator Transurban Group (ASX:TCL) has boosted its interim net profit by 27 per cent on the back of growth from toll revenues and traffic numbers. The company has also confirmed it expects to deliver its full year distribution guidance of 29 cents per share.
Mining products provider Bradken Limited (ASX:BKN) has posted a 65 per cent jump in its first half net profit underpinned by growth in the mining sector and maintained its full year guidance. A fully franked interim dividend of 19.5 cents per share has been declared.
Shares in Leighton Holdings Limited (ASX:LEI) gained on news the property developer’s subsidiary Theiss has scored a $1 billion contract from OZ Minerals Limited (ASX:OZL) to extend the life of the copper and gold miner’s Prominent Hill mine in South Australia.
Best and worst performers
The sectors closed mixed: The best performing sector was Telco Services, rising 15 points to close at 1,170. The worst performing sector was Materials, falling 108 points to close at 11,725 points.
The best performing stock in the S&PASX 200 index was Cochlear Limited (ASX:COH), rising 7.59 per cent to close at $65.52. Shares in OneSteel Limited (ASX:OST)and Virgin Australia Holdings Limited (ASX:VAH) also added value.
The worst performing stock was Transfield Services Limited (ASX:TSE) dropping 4.66 per cent to close at $1.945. Shares in Lynas Corporation Limited (ASX:LYC) and National Australia Bank Limited (ASX:NAB) also closed lower.
IPOs
Two companies started trading today: Mineral explorer Taruga Gold Limited (ASX:TAR) listed at $0.20, started trading at $0.21 and closed at $0.20. Potash exploration and discovery company Highfield Resources Limited (ASX:HFR) listed at $0.20, started trading at $0.30 and closed also at $0.30.
Commodities
Gold is trading at $US1,722 an ounce.
Light crude is $0.05 lower at $US96.86 a barrel.
