Australia's Prime Minister Tony Abbott (L) at the New York Stock Exchange June 10, 2014. REUTERS/Brendan McDermid (UNITED STATES - Tags: BUSINESS POLITICS)
Afternoon Market Report (17:00 AEST)
The first day of the new financial year was much like the last in that sellers remained in control of the share market. The ASX 200 made new lows in the last hour of trade, although the index was able to finish the session off those levels. Compared to Monday where there were losses across the board, Tuesday was slightly more positive with a number of sectors ending with gains for the day.
Miners were one of the better improvers for the session helped by better manufacturing data from China. The HSBC reported that its measure of Chinese manufacturing showed the first improvement in conditions for six months in June. HASBC said that; Output rose for the first time since January, albeit at moderate pace; growth was supported by the strongest expansion of total new work since March 2013; new export orders rose for the second month running; Increased volumes of new business led to the quickest depletion of stocks of finished goods for nearly three years and job shedding was at the lowest level in three months. Some second tier iron ore miners were given a lift as a result; Mount Gibson shares (MGX) ended at 70.5 cents a gain of 1.5 cents or 2.2%
Carsales.com (CRZ) said it will pay $60 million for a controlling stake in Australia's biggest broker of vehicle finance, Stratton Finance. CRZ will have a 50.1% controlling stake in the broker which will be funded using cash and debt. Stratton Finance was established in 1998 and provides finance and insurance for cars, boats, commercial vehicles, business equipment and property. CRZ shares ended ahead by 3 per cent or 32 cents at $10.91.
The main event of the afternoon was the RBA announcement. The decision to leave the cash rate unchanged at 2½% at the July RBA Board meeting was universally expected. The main points to emerge from the post meeting statement were same as those from last month. The RBA is sticking with its view that Australian economic growth will be below the long term trend for the year ahead. Other points of mention included the residential construction upturn being described as "strong" which not a word central banks use much these days. Significantly, there was no discussion of the post budget drop in consumer confidence. The only meaningful response was seen in the Aussie dollar which spiked by a quarter of a cent indicating that perhaps the currency markets were anticipating something more dovish from the central bank.
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