Australian shares rallied for a third day as a well-received profit result from ANZ helped settle nerves ahead of this afternoon's Reserve Bank cash rate decision.
At lunchtime the ASX 200 was trading eight points or 0.15% ahead at 5836 but well off its peak after running as high as 5902 as investors welcomed news that ANZ's profit increased by 5% over the last six months, more than analysts expected. The interim result helped lift the financials sector 0.6% from yesterday's two-month low, which followed an unexpectedly flat profit update from Westpac.
Other pockets of strength this morning included health +0.6%, property trusts +0.4% and telecoms +0.5%. The metals & mining sector fell 1.6% from a two-month high.
"All attention now shifts to the central bank, this afternoon's decision will make for very interesting reading," Chris Conway, Head of Research at Australian Stock Report, told Fairfax. "The market is pricing in a 70 per cent chance but after getting it wrong last month, we shouldn't read too much into that.
"Certainly the recent economic data, in terms of unemployment numbers and CPI, lend to the case for not cutting, as does the strength in the property market. If they do cut expect an assault on the 6000 level, with banks likely to rally."
In economic news, the trade deficit contracted less than expected last month as both exports and imports declined 2%. The balance of trade came down to $1.32 billion in March from $1.61 billion in February. Economists had predicted a deficit of $1 billion. The AIG Services Index contracted to 49.7 last month from a reading of 50.2 in March.
China's Shanghai Composite slid 0.94, while Hong Kong's Hang Seng rallied 0.18%. Japan's Nikkei was closed for a holiday. Dow futures were recently off seven points or less than 0.1%.
Crude oil futures eased six cents this morning to US$58.87 a barrel. Spot gold was 20 cents stronger at US$1,187 an ounce. The dollar was buying 78.51 US cents.
Not much enthusiasm in the broader market for hanging around until 2.30pm. Caution or an 'informed' market? Be very interesting to see if the forex market once again 'anticipates' the RBA's rate decision. ASIC says there is nothing fishy about it. ASIC is the gift that just keeps giving. Trading: IVX gave a simple bounce opportunity. TPI, one of the more reliable intraday swingers at the bigger end, gave what looks like being a profitable entry. Swung and missed at several more, including ERJ.
