RBA cut rates to historical low, banks under pressure: Aus shares close 0.1% higher

Market Reports

by Jessica Amir

The Aussie share market gained 0.1 per cent. We spent most of the session in positive territory, trading higher for the second day of the 2020 financial year, on the S&P500 closing at new record high, on chip makers rallying on the US-China trade truce.

However, after the RBA cut the headline cut cash rate to 1.00 per cent, and traders and investors absorbed the news, the local bourse fell sharply with Financials dragging down the market.

The big four banks fell over 1 per cent on the news. But the sector was under pressure from the get-go, as its day-two of new Banking Code of Practice, which scrapped commissions on lenders mortgage insurance (LMI).

At the closing bell the S&P/ASX 200 index closed 5 points higher to finish at 6,653.

Futures market

Dow futures are suggesting a rise of 22 points.
S&P 500 futures are eyeing a rise of 3 points.
The Nasdaq futures are eyeing a lift of 3 points.
And the ASX200 futures are eyeing a 12 point or 0.2 rise tomorrow.

Economic news

The Reserve Bank cut the headline cut cash rate by a further 25 basis points (0.25 per cent) to 1.00 per cent, taking the rate to an all-time low. The RBA cut rates in June by 25 basis points (0.25 per cent) to 1.25 per cent. According to Mortgage Choice, these two rate cuts could give the average Australian mortgage holder with a $545,000 home loan a saving of $220 per month, if lenders pass on the cuts in full.

Company news

The ASIC has appointed Morgan Stanley to sell 28 million shares shares in Yowie Group (ASX:YOW). The sale follows a decision by the Takeovers Panel to vest shares in the Commonwealth. The sale is about 12.92 per cent of Yowie’s issued capital. Shares in Yowie Group Ltd (ASX:YOW) closed 1.6 per cent lower at $0.06. 

Afterpay (ASX:APT) shares gained 6.9 per cent to $26.09 after it announced co-founder Anthony Eisen will step into the role of CEO and Managing Director. Co-founder, Nick Molnar, will become Global Chief Revenue Officer, reporting to Anthony Eisen. 

Communications and IT provider, Speedcast (ASX:SDA) saw its shares fall 41 per cent after it downgraded its 2019 underlying EBITDA upper-guidance-level by US$21 million. It dropped its guidance to be between US$140 million and US$150 million, that’s down from its prior guidance of between US$160 million and US$171 million. Speedcast cited weaker demand, slower implementation of its existing backlog and delays in expected revenue from the NBN project.

Shares in small-cap biopharmaceutical company, NeuroScientific (ASX:NSB) hit an all time high after jumping 190 per cent to $0.42. It reported breakthrough results from its spinal cord injury model, with nerve regeneration exceeding 300 per cent. Its study paves the way for a new effective way to treat Alzheimer’s and also help patients with reurodegenerative diseases such as Multiple Sclerosis, Parkinson’s. Its Chairman is the co-founder of ResApp (ASX:RAP) and Biolife Science (acquired by Imugene (ASX:IMU))

Best and worst performers of the day

The best performing sector was IT adding 1.2 per cent, followed by Materials, after the iron ore price hit a new five-high and copper prices hit a six-week high on Monday, on the US China trade truce. While the worst performing sector was S&P/ASX Financials shedding 1.1 per cent.

The best performing stock in the S&P/ASX 200 was Afterpay Touch Group Limited (ASX:APT), rising 6.9 per cent to close at $26.09. Shares in Mayne Pharma Group Limited (ASX:MYX) and Mineral Resources Limited (ASX:MIN) followed higher.

The worst performing stock in the S&P/ASX 200 was Speedcast International Limited (ASX:SDA), dropping 41 per cent to close at $2.06. Shares in Hub24 Limited (ASX:HUB) and Eclipx Group (ASX:ECX) followed lower.

Asian markets

Japan’s Nikkei has added 0.1 per cent, Hong Kong’s Hang Seng has gained 1.2 per cent and the Shanghai Composite has lost 0.3 per cent.

Commodities and the dollar

Gold is trading at US$1,392 an ounce.
Iron ore price surged 4.4 per cent to US$123.65
Iron ore futures are pointing to a rise of 4 per cent.
Light crude is US$0.72 up at US$59.19 a barrel.
One Australian dollar is buying 69.80 US cents.

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