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The Australian share market tumbled 1.3 per cent to close at session lows after the Reserve Bank of Australia (RBA) cut its inflation and growth outlook. In the same week the central bank decided to keep rates at a record low of 2.5 per cent today’s statement affirmed a period of stability for interest rates looks likely.
Following a week of declines fuelled by geopolitical fears today’s sell-off accelerated throughout the session as all major sectors extended falls. Gold stocks were given a boost by a lift in the precious metal price as investors found appeal in the perceived safe-haven asset.
In the week ahead Australian reporting season will fire up with more than 30 companies poised to unveil earnings results.
Figures
The S&P/ASX 200 sank 74 points today, widening the weekly decline of 121 points to finish at 5,435.
The value of trades was $5.5 billion on volume of 849 million shares at the close of trade.
The top three stocks by value were Commonwealth Bank of Australia (ASX:CBA), BHP Billiton Limited (ASX:BHP) and Rio Tinto Limited (ASX:RIO).
On the futures market the SPI is 74 points down.
Wall Street
US major indexes have lost ground over the four trading days this week:
The Dow Jones Industrial Average has dropped 1.2 per cent.
The S&P 500 Index has dropped 1.1 per cent.
The NASDAQ has dropped 0.8 per cent.
The 100 Index has dropped 0.9 per cent.
Economic news
The Reserve Bank of Australia has cut its inflation and GDP growth forecasts and maintained its neutral policy bias. The RBA now expects gross domestic product of between 2 per cent to 3 percent in fiscal 2015. Core inflation is expected to sit between 1.75 per cent to 2.75 per cent in the year to the end of June 2015.
Australia’s housing finance figures have fallen short of expectations. The Australian Bureau of Statistics has reported home loans granted rose 0.2 per cent to 52,153 in June, against expectations for a gain of 0.6 per cent. Total housing finance by value rose 1 per cent to $27.7 billion.
The world’s second largest economy booked its biggest ever trade surplus last month. China’s General Administration of Customs has posted a trade surplus of $US47.3 billion in July on the back of a rise in exports but a surprise decline in imports.
Earnings results
Despite broader weakness in the resources sector Rio Tinto Limited (ASX:RIO) stayed on positive ground following the global miners better than expected interim result. Investors were impressed by a 21 per cent rise in underlying earnings delivered by record iron ore volumes and cost cutting. Shares Rio Tinto closed 0.17 per cent higher at $66.43.
Shares in REA Group Limited (ASX:REA) plunged to the benchmark’s worst performer despite posting a 37 per cent full year profit jump. The online real estate advertiser’s result missed expectations following a period of acquisitions, investments and innovation by the company. Shares in REA Group retreated 8.65 per cent to close $42.78.
News Corp (ASX:NWS) has reported a drop in its annual revenue and profit on the back of lower advertising revenues. Over the 2014 financial year the media company’s revenue dipped 4 per cent and net profit fell 53 per cent.
Ahead of Crown Resorts Limited (ASX:CWN) annual financial results next Thursday James Packer's Macau joint venture, Melco Crown has booked a lower second quarter profit. Earlier this week Crown Resorts announced a $280 million acquisition in Vegas it plans to develop on the legendary gaming strip.
Best and worst performers
All sectors retreated by close: The sector with the smallest losses was utilities, losing 0.2 per cent to close at 5,893. The worst performing sector was consumer discretionary, dropping 2 per cent to close at 1,779 points.
The best performing stock in the S&P/ASX 200 was Beadell Resources Limited (ASX:BDR), rising 6.93 per cent to close at $0.54. Shares in Regis Resources Limited (ASX:RRL) and Pacific Brands Limited (ASX:PBG) also closed higher.
The worst performing stock was REA Group Limited (ASX:REA), retreating 8.65 per cent to close at $42.78. Shares in Henderson Group (ASX:HGG) and Buru Energy Limited (ASX:BRU) also closed lower.
Commodities
The price of gold is trading at $US1,322 an ounce, up $US26.71 over the week.
Light crude is $0.42 higher at $US97.34 a barrel.
Currencies
The Australian dollar hit a two-month low following the RBA’s statement and is now buying $0.9254. Yesterday’s surprise 6.4 per cent Australian unemployement rate also put pressure on the local currency which has lost $0.006 against the greenback over the week.
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