Quiet day as traders focus on rates and races - Sydney Morning Herald

Australian stocks have opened flat in quiet trade as market players await a Melbourne Cup day interest rate decision from the central bank.

In early trade, the benchmark S&P/ASX200 index was down 2.7 points, or 0.06 per cent, at 4,471.4 points, while the broader All Ordinaries index had fallen 3.2 points, or 0.07 per cent, at 4,490.4 points.

Trading volumes were low at the open, with national turnover at 192.7 million securities worth $350.2 million, as most of the nation turned their attention to activities at Melbourne’s Flemington racecourse.

‘‘The volumes recently have been pretty modest anyway so I suspect that today they are going to be super modest,’’ RBS Morgans equities director Bill Chatterton said. ‘‘I don’t think there is going to be a whole lot happening, it is going to be focused on horses running the track and people having a bit of fun.’’

For investors keeping an eye on the market rather than the big race, it was the Reserve Bank of Australia (RBA) monthly board meeting that was the focus of their attention.

Some 12 of the 15 economists surveyed by AAP said they expected the central bank to cut the cash rate by 25 basis points to 3 per cent.

A statement from the RBA board on interest rates is due at 2.30pm.

Mr Chatterton said he expected the RBA to cut rates, given some concerns about a slowing economy and easing worries on inflation.Wall Street finished higher.

The Dow gained 0.15 per cent, the S&P500 advanced 0.22 per cent and the NASDAQ ended up 0.59 per cent.

The spot price of gold in Sydney was $US1,686.10 per fine ounce, up $US6.72 from Monday’s local close of $US1,679.38 per ounce.There were 243 stocks trading up, 253 down and 257 unchanged at 1027 AEDT.

What you need to know

• The SPI was 1 points higher at 4457
  


• The $A was trading at $US1.036


• In the US, the S&P500 added 0.09% to 1415.49


• In Europe, the FTSE100 lost 0.5% to 5839.06
  


• China iron ore added 40 US cents to $US120.50


• Gold added 23 US cents to $US1683.80 an ounce


• WTI crude oil added 33 US cents to $US85.19 a barrel


• RJ/CRB commodities index lost 1.55% to 292.29
  

Making news today

In economics news:

• Reserve Bank of Australia (RBA) November board meeting and interest rate decision


• ABS House price indexes for September quarter

In company news:

• The following companies hold annual general meetings: Nufarm, ERO Mining, Oakland Resources, Regalpoint Resources

Analyst rating changes:

• Westpac cut to 'neutral' at Credit Suisse


• Northern Iron cut to 'sector perform' at RBC Capital


• Hyflux cut to 'underweight' at HSBC


• Alumina raised to 'buy' at Bank of America/Merrill Lynch

The dollar

The Australian dollar is hovering in a tight range as investors await the outcome of the Reserve Bank of Australia’s (RBA) board meeting and the US presidential election.

At 7am the local unit was trading at $US1.0361, slightly down from $US1.0368 cents. Bank of New Zealand currency strategist Mike Jones said trade in the Australian dollar had been subdued.

"It’s been a case of currency markets playing a waiting game over the past 24 hours," he said from Wellington. "The US election results and the RBA decision are expected soon. Investors have been bracing themselves for the volatility ahead."

However, Mr Jones said he expected Tuesday’s decision to be a close one.

"The market is very uncertain about what to expect. It’s still a 50-50 chance as to whether or not the RBA cuts," he said.

"That means you’re going to see volatility in the Aussie dollar irrespective of what the RBA does today."

Offshore overnight

Bonds

German government bonds rose, pushing two-year note yields below zero for the first time in two months, as Greece prepared for a vote as soon as this week on austerity measures needed to keep the nation in the euro. A negative yield means investors who hold a security until it matures will receive less than they paid to buy it.

• Germany’s two-year yield fell one basis point to minus 0.01%. The benchmark 10-year bund yield declined two basis points to 1.43% after reaching 1.42%


• Spanish 10-year yield climbed nine basis points to 5.75%

Treasury 10-year notes rose for a second day as Americans prepared to choose a president who will face unprecedented debt levels and a round of tax increases and spending cuts, which threaten to slow the economy.

• US 10-year yield dropped three basis points to 1.68%

United States

In late afternoon trade, US stocks held steady and the dollar edged up on Monday as investors played it safe on the day before Americans choose their president and as Greece headed into two key votes to secure further rescue funds.

Key numbers:

• S&P 500 added 0.09% to 1415.49


• Dow Jones Indus Avg added 0.26% to 13126.87


• Nasdaq composite added 0.65% to 3001.66

Europe

European equities slid in cautious trading on the eve of the US presidential election.

Key numbers:

• London’s FTSE 100 lost 0.5% to 5839.06


• In Frankfurt the DAX 30 lost 0.515 to 7326.47


• In Paris’s CAC 40 lost 1.26% to 3448.5


• In Madrid, the IBEX 35 lost 1.89% to 7818.6

Asia

Asian markets were mostly down as better-than-expected US jobs figures were offset by caution ahead of the US presidential election and the start of China’s leadership transition.

Key numbers:

• Japan’s Nikkei 225 lost 0.48% to 9007.44


• Hong Kong’s Hang Seng lost 0.47% to 22,006.40


• China’s Shanghai lost 0.14% to 2114.03

Commodities

Energy

Oil prices climbed slightly as traders react to a pick up in China’s services industry ahead of Beijing’s leadership transition and the US presidential election.

• New York’s main contract, light sweet crude for delivery in December, rose 17 US cents on Monday to $US85.03 a barrel.


• Brent North Sea crude for December gained 14 US cents to $US105.82 a barrel in late London deals.

Precious metals

Gold futures edged have higher as this week’s US presidential election and a set of key European political events push traders who had bet on lower prices to cash out following Friday’s selloff.

• The most-actively traded contract, for December delivery, on Monday rose $US8, or 0.5 per cent, to settle at $US1683.20 a troy ounce on the Comex division of the New York Mercantile Exchange.

Base metals

Base metals closed mostly lower on the London Metal Exchange (LME), pressured in part by a stronger US dollar, and ahead of the outcome of the US presidential election.

• At the close of open outcry trading on Monday, LME three-month copper had fallen 0.2 per cent to be at $US7650 a metric ton. The metal recouped some ground in afternoon trading, after hitting a two-month low at $US7596/ton earlier.


• Lead was the strongest performer in the complex, ending 1.5 per cent higher on the day at $US2126/ton.

How we fared yesterday

The Australian sharemarket finished slightly higher as investors await the United States presidential election and the Reserve Bank's interest rate decision on Tuesday.

At the close on Monday, the benchmark S&P/ASX200 index was up 14 points, or 0.3 per cent, at 4474.1, while the broader All Ordinaries index was up 10.3 points, or 0.2 per cent, at 4493.6.

BusinessDay with agencies