The Australian share market has bounced back from yesterday steep 2 per cent decline as bargain hunters step in. Following mixed offshore leads local equities have sustained gains of more than 1.5 per cent amid broad expectations the Reserve Bank of Australia will lower rates for a second straight month this afternoon.
The S&P/ASX 200 index has bounced 50 points and is 4,035. On the futures market the SPI is 46 points higher.
Economic news
The Australian services sector contracted at a slower rate last month. According to Australian Industry Group and Commonwealth Bank of Australia (ASX:CBA) the 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
Responding to media speculation Telstra Corporation Limited (ASX:TLS) has confirmed it was approached by and is in talks with Vodafone New Zealand. The talks are to explore the potential sale of Telstra’s New Zealand subsidiary, Telstra Clear, to Vodafone New Zealand. Telstra says talks are continuing and there is no certainty a deal will come through. Shares in Telstra have firmed 0.27 per cent and are trading at $3.67.
Warrnambool Cheese and Butter Factory Limited (ASX:WCB) has cut its net profit guidance and now expects its full year profit to fall by as much as 30 per cent from the year before. The forecast drop is largely because of softening price trends for its products which are seeing buyers adopt short term contract positions to take advantage of lower spot prices. As a result the dairy company says it will hold higher than expected end of year inventories which will also impact profitability. Shares in Warrnambool Cheese and Butter Factory have fallen 4.03 per cent and are trading at $3.33.
Best and worst performers
The best performing sector is Energy gaining 304 points to 12,388. Shares in Beach Energy Limited (ASX:BPT) have risen 7.45 per cent and trading at $1.01. Shares in Dart Energy Limited (ASX:DTE) and Buru Energy Limited (ASX:BRU) are also stronger.
The sector with the smallest gains is Telco Services, rising 1 point to 1,255. Shares in Telecom Corporation of New Zealand (ASX:TEL) have fallen 3.32 per cent, trading at $1.89. Shares in Chorus Limited (ASX:CNU) and Nextdc Limited (ASX:NXT) are also lower.
Gold and the dollar
Gold is trading at $US1,623 an ounce.
The Australian dollar is buying 97.69 US cents.
