RBA signals another cut: Aus shares lacks direction, steady at noon

Market Reports

by Jessica Amir

The Australian share market broke out of its two-day down trend earlier in the session, and has now dipped into the red, at midday on Tuesday, dipping its toes lower by 4 points. 

Half of the major sectors of the market are in positive territory with Property and Materials leading, with the iron ore price trading higher overnight, hitting $121, a-two-week high and hovering at 5-year highs.

Year-to-date, Fortescue (ASX:FMG) is 117 per cent higher, Rio Tinto (ASX:RIO) is up 33 per cent and BHP (ASX:BHP) is 22 per cent higher.

On a yearly basis, the Materials sector is up 16.8 per cent, with the Information Technology sector up 19 per cent and Communications Services (Telcos) are up 25 per cent.

The S&P/ASX 200 index is 4 points or 0.05 per cent lower at 6,649. On the futures market the SPI is 3 points lower.

Economic news

The RBA says ‘further reduction in the level of interest rates would support the necessary growth in employment and incomes, and promote stronger overall economic conditions, which would in turn support a gradual increase in underlying inflation.’

The RBA made these comments in its Monetary Policy Meeting minutes today, from its July 2 meeting where it slashed the cash rate 0.25 per cent, to an all time low of 1 per cent. 

Broker moves

Citi has dropped its 12-month price target for Perpetual (ASX:PPT) from $41.00 to $39.50. However it has lifted its FY19E EPS by 2 per cent, mainly due to unrealised gains on financial assets in the second half, but Citi cut its FY20E by 3.5 per cent and FY21E EPS 2.3 per cent on weaker than expected fourth quarter funds under management. Its shares are currently one of the worst performing stocks in the ASX200 at noon. Shares in Perpetual (ASX:PPT) are trading 5.5 per cent lower at $39.57. Year-to-date its shares are 22 per cent higher, while year-on-year its shares are 11 per cent lower.

Company news

Oil Search (ASX:OSH) announced its second quarter results for the period ending 30 June 2019, highlighting half year rise of 39 per cent in revenue, 37 per cent growth in sales and a 38 per cent in production. Its PNG LNG project saw strong performance despite scheduled downtime for maintenance and in PNG in June a new Prime Minister was sworn in, Hon James Marape. It also inked a new Gas Agreement for Papua LNG Project. Shares in Oil Search (ASX:OSH) are trading 1.2 per cent lower at $7.25 at noon. Year-to-date its shares are 1 per cent higher, year-on-year its shares are about 19 per cent lower.

Audio networking company, company for the AV industry, Audinate (ASX:AD8) has announced its products, Dante AV Module and Dante AV Product Design Suite are now commercially available to be ordered by manufacturers, marking the beginning of video offerings for the company. US manufacturer and supplier of networking and connectivity (for ProAV and Telephony), Patton Electronics, is the first customer to sign a purchase order. Shares in Audinate (ASX:AD8) are trading 1.4 per cent lower at $7.97 at noon. Year-to-date its shares are 131 per cent higher, year-on-year its shares are 87 per cent higher.

Best and worst performers

The best-performing sector is S&P/ASX Materials, adding 0.5 per cent, while the worst performing sector is S&P/ASX Energy, shedding 0.95 per cent.

The best performing stock in the S&P/ASX 200 is Galaxy Resources Limited (ASX:GXY), rising 6.5 per cent to $1.40, followed by shares in Speedcast International Limited (ASX:SDA) and Fortescue Metals Group Ltd (ASX:FMG).

The worst performing stock in the S&P/ASX 200 is Perpetual (ASX:PPT), dropping 5.5 per cent to $39.57, followed by shares in Nib Holdings (ASX:NHF) and Domino's Pizza Enterprises (ASX:DMP).

Asian markets

Japan’s Nikkei has lost 0.6 per cent, Hong Kong’s Hang Seng is down slightly and the Shanghai Composite is virtually flat (adding 0.02 per cent).

Commodities and the dollar

Gold is trading at US$1,414 an ounce.
Iron ore price rose 1.8 per cent to US$121.41.
Iron ore futures are pointing to a rise of 3.9 per cent.
One Australian dollar is buying 70.35 US cents.

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