Aussie shares retreated in afternoon trade to close 0.5% lower after opening higher on the back of a strong lead from global equity markets and a rise in commodity prices. While resource stocks continued to rally, financials weighed.
The RBA flagged that further interest rate hikes were likely but was not willing to give an indication of how much and how often. The central bank has increased rates twice in the last two months.
The dollar opened at fresh 15-month highs, providing fresh headwinds for exporters and Aussie companies which do significant amounts of international work when they repatriate their profits back into Australia.
Meanwhile, business conditions increased 6.7 points to its highest level since the March quarter 2008. According to the Australian Chamber of Commerce and Industry small business survey business conditions reached an index of 49.1 in the September quarter. A level below 50 means conditions are contracting.
At the close of trade, the All Ords had lost 23.6 to 4,750.2, while the ASX/200 shed 25.8 to 4,729.4. About 2.9 billion shares worth around $5.5 billion had changed hands.
After surging in morning trade Rio Tinto fell away to only close 52c, or 0.7% higher to $73.40. Reports surfaced the company was set to bank over half a billion dollars from the sale of its interest in a US coal company.
BHP Billiton rose 40c, or 1% to $40.50. The miner benefited from a spike in base metals, which saw prices on the major materials up by at least 4% overnight.
The Materials and Resources sector added 0.6%.
Alumina surged 3.4% to $1.685.
Gold miner Newcrest weakened 16c, or 0.5% to $35.24 despite the price of the precious metal setting new highs.
Bluescope Steel shed 6c to $2.88, while Onesteel dipped 3c to $3.11.
The Energy sector wasn’t as buoyant despite a 3.2% rise in the price of crude overnight. It weakened 0.5% overall.
Woodside Petroleum fell 50c, or 1% to $49.60 and Santos fell 14c, or 0.9% to $15.24.
Uranium miner Paladin jumped 2.8% to $4.42.
The Banks and Financials sector lost 1.5%.
Three of the four major banks lost ground Tuesday, with CBA the worst performer, down $1.32, or 2.4% to $52.64 despite a target price upgrade by Citi, dipped c or % to $53.41.
Westpac fell 59c, or 2.3% to $24.70.
NAB was flat at $28.50 after launching a case against the Australian Tax Office in the Federal Court yesterday in relation to the tax deductibility of interest on capital instruments
The insurers were trading below the gain line by the close, with IAG off 15c to $3.92.
Perpetual rose 91c, or 2.7% to $34.12 following broker upgrades from UBS and RBS this morning. The fund manager reported funds under management was $28.8 billion by 31 October 2009, down from $29.3 billion a month earlier.
The Property Trust sector lost 0.7%. Westfield edged 9c, or 0.7% lower to $12.22, while Goodman Group rallied 1.5c, or 2.4% to 63c after announcing its Goodman Group Industrial Fund would undertake a $320 million capital raising.
The Industrials sector lost 1.1% on the back of Leighton shedding $1.16, or 3% to $36.99.
Brambles lost 16c to $6.88. Toll was trading 23c below the line at $8.33, while Macquarie Airports added 2c, or 0.7% to $2.82.
Despite the retailer sectors in Japan and the US leading their markets higher, the Australian Consumer Discretionary sector was down 0.3% at the close.
JB Hi-Fi, which climbed as much as 2.8% in the morning, retreated to be 0.3%, or 6c lower at $22.59.
The gamers were mixed. Crown shed 12c to $8.05, while Aristocrat added 11c to $4.77.
Media stocks lost ground with Fairfax down 1c, or 0.6% to $1.72, while Newscorp reversed early gains to finish down 12c, or 0.7% to $15.93.
The Consumer Staples sector put on 0.7%. Wesfarmers climbed 77c, or 2.7% to $29.32 as an internet blog suggesting the company’s Lumley Insurance could be in QBE’s sights as a possible acquisition.
Woolworths added 5c, or 0.2% to $28.40. Foster's lost 11c to $5.54.
Telstra was off by 5c to $3.30, as the broader Telecommunications sector dipped 1.4%.
The defensive Healthcare sector also performed strongly, adding 0.2%. CSL added 16c, or 0.5% to $32.10 and Cochlear lost 57c to $61.28.
Around the region, the Nikkei 225 lost 46.3 to 9,744.8, while the Straits Times Index eased 3.1 to be at 2,780.8. Across the Tasman, the NZSE50 lost 42.5 to 3,131.5. The Hang Seng dropped 101.2 to 22,842.8.
Spot gold was trading at US$1,136.30 per ounce, and the Aussie was buying US$0.9345.
Perilya taps the market for $55m
Perilya said it has launched a non-renounceable, fully underwritten 1-for-3 rights issue to raise $55m. The miner said that it would potentially apply the funds raised to a stable of exploration and mining prospects.
Half way through the day, Perilya shares were down 3c to 48.5c.
Tianshan and Corvette Resources to merge
Tianshan Goldfields and Corvette Resources have agreed to merge under a scheme of arrangement. The two junior gold miners said that following the merge they would have a market capitalisation of around $60 million, with cash reserves of $30 million.
By the finish, Tianshan shares were down 0.1c to 9.9c, while Corvette shares were down 4c to 21c.
ThinkSmart expects growth in 2010
ThinkSmart reaffirmed its profit guidance for 2009 and said it expected strong EBITDA growth in 2010. The computer and office equipment financing company said the key drivers behind the group delivering on its guidance of positive EBITDA earnings growth in 2009 were the ongoing strength of the group’s Australian operations and the improved performance of UK electrical retailing partner DSG international.
At the end of the day, ThinkSmart shares were up 7.5c to 75.5c.
Goodman fund to raise $320m
Goodman Group said its unlisted industrial fund GAIF would undertake a $320m capital raising with the purpose of strengthening its balance sheet. GAIF plans to raise $200 million through a pro rata non-renounceable 1 for 10 rights issue at 75c per share and $120 million through a 12-month mandatory distribution reinvestment plan.
At the finish, Goodman Group shares were up 1.5c to 63c.
