RBA to cut rate by 0.25% by Nov says UBS, markets say Aug: Aus shares lose 0.2%

Market Reports

by Jessica Amir

The Australian share market closed in the red for the third straight session. The local bourse opening higher and dipped in and out of negative territory for most of the session, trading in a 24 point range before closing 0.2 per cent lower.

The iron ore price hit a two week high earlier, buoying the Material sector earlier, with FMG gaining 1.7 per cent while selling in South32 (ASX:S32) saw the mining sector close pretty much flat.

Energy stocks fell the most today with Woodside (ASX:WPL) losing over 2 per cent with the WTI price trading at a weekly low.

At the closing bell the S&P/ASX 200 index closed 0.2 per cent 12 points lower to finish at 6,641.

Futures market

Dow futures are suggesting a rise of 12 points.
S&P 500 futures are eyeing a lift of 2 points.
The Nasdaq futures are eyeing a gain of 7 points.
And the ASX200 futures are eyeing a 14 point fall.

Economic news

The RBA says ‘a 25-basis point reduction in the cash rate had been fully priced into the markets by August 2019, with a further easing expected by the end of the year’.

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.

UBS advised today it still expects the RBA to cut the cash rate by 0.25 per cent by November.

The RBA made the cut in July saying a ‘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.’

Company headlines

Rio Tinto (ASX:RIO) announced a 3 per cent drop in second-quarter iron ore shipments after Tropical Cyclone Veronica took effect. 2019 guidance for Pilbara shipments were revised down previously (19 June 2019) to between 320 and 330 million tonnes, (down from 333 and 343 million tonnes), on the back of mine operational challenges. Unit cost guidance was revised to $14 - $15 per tonne (up from $13 - $14 per tonne). Rio also announced a production delay in its underground project in Mongolia of 16 months to 30 months and its costs are $1.2 billion to $1.9 billion higher. Shares in Rio Tinto (ASX:RIO) closed 0.6 per cent lower at $103.25. Year to date its shares have outperformed BHP and Rio’s shares are up 33 per cent, BHP (ASX:BHP) has gained 20 per cent and Fortescue (ASX:FMG) is up 115 per cent.

Galaxy Resources (ASX:GXY) has hit record production results from its Western Australian Mt Cattlin project, of 56,460 dry metric tonnes (dmt), greater than its expected target of 45,000 – 50,000 dmt in the June 2019 quarter.

Investment and superannuation platform, HUB24 (ASX:HUB) has posted a record june quarter, seeing 32.4 per cent growth ($979 million growth) compared to the same time last year, with inflows hitting $1.5 billion

After Perpetual (ASX:PPT) released weaker than expected fourth quarter 2019 results with net outflows of $1.1 billion and its funds under management (FUM) falling by $300 million to $27.1 billion, Citi has cut Perpetual’s 12 month price target from $41.00 to $39.50. Citi lifted its FY19E EPS by 2 per cent, but cut its FY20E by 3.5 per cent and FY21E EPS 2.3 per cent.

Best and worst performers of the day

The best performing sector was S&P/ASX A-REIT adding 0.8 per cent with Utilities and Healthcare gaining, while the other sectors closed flat or lower with the worst performing sector being S&P/ASX Energy, shedding 1.4 per cent.

The best performing stock in the S&P/ASX 200 was Galaxy Resources Limited (ASX:GXY), rising 4.2 per cent to close at $1.36 Shares in HUB24 Limited (ASX:HUB) and Nrw Holdings Limited (ASX:NWH) followed higher.

The worst performing stock in the S&P/ASX 200 was Perpetual Limited (ASX PPT), dropping 5.9 per cent to close at $39.41. Shares in Domino's Pizza Enterprises Limited (ASX:DMP) and Mayne Pharma Group Limited (ASX:MYX) followed lower.

Asian markets

Japan’s Nikkei has lost 0.7 per cent, Hong Kong’s Hang Seng has gained 0.2 per cent the Shanghai Composite has lost 0.3 per cent

Commodities and the dollar

Gold is trading at US$1,413 an ounce.
Iron ore price rose 1.8 per cent to US$121.41.
Iron ore futures are pointing to a rise of 2.4 per cent.
Light crude is US$0.87 lower at US$59.43 a barrel.
One Australian dollar is buying 70.35 US cents.

Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.