Midday: ASX drops as RBA cuts economic outlook

Market Reports

Looking past positive leads and back-flipping from yesterday’s gains the Australian share market opened lower and is 0.6 per cent down at noon. Jubilation over yesterday’s Chinese trade data has turned to caution ahead of today’s Chinese CPI, PPI, retail sales, industrial production and fixed-asset investment figures. Closer to home investors are now digesting the RBA’s quarterly statement on monetary policy. 
 
Figures
 
The S&P/ASX 200 index has fallen 35 points to 5,030. On the futures market the SPI is 20 points lower. 
 
Economic news
 
China's consumer price index (CPI), a main gauge of inflation, stayed steady last month. The National Bureau of Statistics reports the CPI came in at 2.7 per cent in July, against expectations for a rise to 2.8 per cent.
 
The Reserve Bank of Australia has cut its outlook for growth and expressed uncertainty about how the economy will transition from a period of significant mining investment. The Central Bank’s quarterly monetary policy statement predicts GDP to grow 2.25 per cent this year, down from predictions of 2.5 per cent three months ago. The RBA says, ‘‘The forecast for Australian GDP continues to embody a transition in the drivers of growth from mining investment to other parts of domestic demand and to exports.’’
 
Company news
 
The franchisor of Brumby's Bakeries Retail Food Group Limited (ASX:RFG) expects to show a 13 per cent rise in its full year net profit from last year’s $30.3 million when it releases results on August 22. 
 
Financial services systems supplier Iress Limited (ASX:IRE) has raised about $152 million after completing the institutional component of its entitlement offer. The retail component will open August 12.  
 
FKP Property Group (ASX:FKP) is refining its strategy. The property and investment company has decided to change its name to Aveo Group, subject to shareholder approval, will dispose of its holding in PBD Developments Limited (ASX:PBD) and book a $187.9 million impairment as a result of a revaluation of its property assets. 
 
Drug developer Mayne Pharma Group Limited (ASX:MYX) is set to receive upfront and milestone payments after inked two marketing and distribution deals in Europe for one of its products to treat fungal infection.  
 
Best and worst performers
 
The best performing sector is materials gaining 128 points to 9,491. Shares in Perseus Mining Limited (ASX:PRU) have risen 5.94 per cent and trading at $0.54. Shares in Silver Lake Resources Limited (ASX:SLR) and OZ Minerals Limited (ASX:OZL) are also stronger. 
 
The worst performing sector is health care, falling 202 points to 13,495. Shares in Primary Health Care Limited (ASX:PRY) have fallen 3.16 per cent, trading at $4.90. Shares in Acrux Limited (ASX:ACR) and Ramsay Health Care Limited (ASX:RHC) are also lower. 
 
Gold and the dollar
 
Gold is trading at $US1,314 an ounce. 
The Australian dollar is buying 91.22 US cents.

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