The Australian share market climbed back from session lows to finish flat, with the market taking an upward turn this afternoon as investors reacted to the RBA’s largely unexpected decision to cut the official cash rate to a record low. Central bank Governor Glenn Stevens announced a 25 basis point reduction, lowering the rate to 2.75 per cent.
The S&P/ASX 200 index closed 13 points down to finish at 5,144. The value of trades was $4.7 billion on volume of 828 million shares at the close of trade. The top three stocks by value were BHP Billiton Limited
(ASX:BHP), Westpac Banking Corporation
(ASX:WBC) and Commonwealth Bank of Australia
(ASX:CBA).
On the futures market the SPI is 22 points down.
Economic news
The Australian Industry Group and Housing Industry Association’s Performance of Construction Index (PCI) says the construction sector shrank for the 35th consecutive month in April, with home and apartment building continuing to decline. The index fell 3.8 points to an index level of 35.2 in April, marking the fastest rate of contraction since September 2012.
The Australian Bureau of Statistics says Australia’s trade balance reversed 14 consecutive months of deficits to swing into surplus in March, coming in at $307 million. Metal ores export earnings surprised analysts with a lack of strength, as iron ore rose just $1billion. This was significantly short of expert tips of a $1.5 billion increase.
Company news
National Australia Bank Limited
(ASX:NAB) was the first of the big four banks to respond to the RBA decision, opting to pass on the 25 basis point rate cut in full to standard variable home loan customers. NAB says it would reduce its standard variable home loan rate to 6.13 per cent per annum, equating to a saving of $62.50 per month in interest on the average $300,000 home loan. Shares in NAB closed 1.64 per cent down at $32.95.
Financial services company WHK Group Limited
(ASX:WHG) says a merger proposal from wealth management firm SFGA has been withdrawn following consideration of a WHK trading update from the end of April. SFGA has advised it will consider a revised proposal once the parties are in a position to review one another’s full year performance and outlooks for fiscal 2014. Shares in WHK Group are in a trading halt, they last traded at $0.80.
Billabong International Limited
(ASX:BBG) shares entered a trading halt ahead of an update about its potential takeover by a consortium including the retailer's US-based executive Paul Naude and private equity firm Sycamore Partners.
Telstra Corporation Limited
(ASX:TLS) has secured licences in the spectrum auction for $1.3 billion. The spectrum allocations will be funded mostly through debt and Telstra is required to pay the amount in the third quarter of 2014.
Slater & Gordon Limited
(ASX:SGH) says its signed term sheets to buy three UK personal injury law firms. The law firm plans to raise $63.9 million to fund its UK expansion plans.
Whitehaven Coal Limited
(ASX:WHC) achieved record coal railings during the month of April. Whitehaven increased railings to 0.95 Mt in April, up from the previous record of 0.82 Mt in January this year.
Best and worst performers
The best performing sector was Materials adding 188 points to close at 9,429.
The worst performing sector was Consumer Staples, losing 226 points to close at 10,177.
The best performing stock in the S&PASX 200 was Mirabela Nickel Limited
(ASX:MBN), rising 9.09 per cent to close at $0.18. Shares in Decmil Group Limited
(ASX:DCG) and Paladin Energy Limited
(ASX:PDN) also closed higher.
The worst performing stock was Coca-Cola Amatil Limited
(ASX:CCL), dropping 10.52 per cent to close at $12.93. Shares in Coalspur Mines Limited
(ASX:CPL) and Resolute Mining Limited
(ASX:RSG) also closed lower.
Commodities
Gold is trading at $US1,461 an ounce. Light crude is $0.79 down at $US95.37 a barrel.
The Australian dollar
The Australian dollar is buying $US1.019.
