The Australian share market has returned to positive territory but finished largely flat after a lackluster afternoon, with investors remaining cautious on the back of the RBA minutes and taking only a moderate lead from a positive Rio Tinto production report. Among the majors, telco services ended up in slightly positive territory.
The S&P/ASX 200 index closed 5 points up to finish at 4,986. The value of trades was $3.1 billion on volume of 624 million shares at the close of trade. The top three stocks by value were Treasury Wine Estates Limited
(ASX:TWE), Westpac Banking Corporation
(ASX:WBC) and Commonwealth Bank of Australia
(ASX:CBA).
On the futures market the SPI is 2 points up.
Economic news
The Reserve Bank of Australia has released its board meeting minutes for July, and we’ll take a look at some of the key points now. According to Governor Stevens and the RBA, the hold call was made because:
• The outlook for both mining and non-mining business investment remained uncertain
• Mining investment was likely to remain high for some quarters given the considerable volume of firmly committed work.
• An exchange rate adjustment was occurring, and a substantial degree of monetary stimulus was already in place, therefore members assessed the current stance of policy as appropriate for now.
Company news
Rio Tinto Limited
(ASX:RIO) says its cost cutting drive remains on track and has reaffirmed its full year output guidance after boosting its second quarter iron ore production by 7 per cent to 51.82 million tonnes. The global miner expects to hit 265 million tonnes for the full year barring weather constraints, and is on track to meet a $750 million targeted reduction in exploration spending for the calendar year. Shares in Rio Tinto closed 1.37 per cent up at $55.52.
Billabong International Limited
(ASX:BBG) entered a trading halt ahead of an update on the outcome of talks with former suitors over assets sales and refinancing. The surfwear retailer entered its latest talks with Altamont Capital Partners and Sycamore Partners following the breakdown of takeover talks in June, and has requested the halt until Thursday morning at the latest. Shares in Billabong last traded at $0.25.
Energy company Orica Limited
(ASX:ORI) shares eased 2.14 per cent after announcing a gas supply deal with Strike Energy Limited
(ASX:STX) in which it will make pre-payments of up to $52.5 million to fund the development of Strike’s Cooper Basin gas project.
Mining services provider Boart Longyear Limited
(ASX:BLY) eked out some small gains despite officially had its corporate debt rating downgraded by financial services firm Standard & Poor’s.
Sims Metal Management Limited
(ASX:SGM) is selling its stake in a former subsidiary of its North American metals business and expects to incur a loss of $9 million before tax from the transaction.
McMillan Shakespeare Limited
(ASX:MMS) shares were dumped today, falling almost 15 per cent as the federal government proposed changes to the fringe benefits tax which will remove the use of company cars for personal use, a move that will have a material impact on the vehicle leaser’s business.
Best and worst performers
The best performing sector was Telco services adding 8 points to close at 1,677.
The worst performing sector was Consumer Discretionary, losing 12 points to close at 1,650.
The best performing stock in the S&PASX 200 was Paladin Energy Limited
(ASX:PDN), rising 7.29 per cent to close at $1.03. Shares in Envestra Limited
(ASX:ENV) and Wotif.com Holdings Limited
(ASX:WTF) also closed higher.
The worst performing stock was Perseus Mining Limited
(ASX:PRU), dropping 21.97 per cent to close at $0.52. Shares in McMillan Shakespeare Limited
(ASX:MMS) and Automotive Holdings Group Limited
(ASX:AHE) also closed lower.
Commodities
Gold is trading at $US1,281 an ounce. Light crude is $0.19 down at $US106.13 a barrel.
The Australian dollar
The Australian dollar is buying $US0.9191.
