The Australian share market looks to rise this morning after yesterday’s hefty rate cut and following strong reads on US and Chinese manufacturing activity.
Economic news
The Reserve Bank of Australia [RBA] has cut interest rates by the largest amount since February 2009. Australia’s official cash rate has been slashed by 50 basis points, from 4.25 per cent to 3.75 per cent.
China's official purchasing managers' index hit a 13-month high last month. The index lifted to 53.3 in April from 53.1 the month before, coming in slightly under expectations but above the 50 level which indicates expansion.
Defying expectations for a fall, America’s manufacturing activity has grown at the fastest pace in almost a year. The Institute of Supply Management's monthly index increased to 54.8 in April from 53.4 the month before. A read above 50 indicates expansion.
Figures
Wall Street started the first day of May higher: The Dow Jones Industrial Average added 66 points to close at 13,279, the S&P500 added 8 points to close at 1,406 and the Nasdaq added 4 points to close at 3,050.
European markets closed mixed on Tuesday: London’s FTSE added 74 points, Paris lost 53 points and Frankfurt lost 40 points.
Asian markets closed mixed yesterday: Hong Kong’s Hang Seng added 353 points, Tokyo’s Nikkei lost 170 and China’s Shanghai Composite lost 8 points.
The Australian share finished at a nine-month closing high on Tuesday after rising 0.8 per cent. Yesterday the S&P/ASX 200 index gained 33 points to finish at 4,430. On the futures market the SPI is now 20 points higher.
Currencies
The Australian Dollar at 7:15AM was buying $US1.0337 cents, 63.75 Pence Sterling, 82.75 Yen and 78.1 Euro cents.
Stocks to watch
Bank of Queensland Limited (ASX:BOQ) has become the first bank to respond to the RBA’s rate cut. The Brisbane based region lender will lower its standard variable home loan rate by 35 basis points to 7.11 per cent from next Friday. CEO Stuart Grimshaw blamed “economic uncertainty” from preventing the lender passing on the full 50 basis point rate cut. Shares in Bank of Queensland dropped 2.68 per cent on Tuesday to close at $7.26.
Pressure on the Big Four banks is mounting to pass on the rate cut to consumers. ANZ Banking Group (ASX:ANZ) is expected to announce a decision next Friday when it reveals its new mortgage rates, while announcements from Commonwealth Bank of Australia (ASX:CBA), Westpac Banking Corporation (ASX:WBC) and National Australia Bank Limited (ASX:NAB) are expected this week. ANZ is due to release its first half results today. Shares in ANZ lifted 0.33 per cent on Tuesday to close at $23.99.
Ex-dividends today
Bank of Queensland Limited (ASX:BOQ)
Trust Company Limited (ASX:TRU)
Ex-dividends this week
Australian Pharmaceutical Industries Limited (ASX:API)
Commodities
Gold is down $1.80 to $US1,662 an ounce for the June contract on Comex.
Silver is down $0.08 to $31.00 for May.
Copper is up $0.014 at $3.84 a pound.
Oil is up $1.29 at $106.16 a barrel for June light crude in New York.
