Shares dip ahead of RBA rate call, deal hurdles remain
While Australian shares tumbled ahead of the central bank’s interest rate decision, energy stocks were the only clear winners as investors digested the facts touting the US-Iran peace deal.
The S&P/ASX200 fell 38 points, or 0.43 percent, to 8,876 points at midday trading on Tuesday, while the All Ordinaries index lost 37.7 points, or 0.41 percent, to 9,090.3 points.
The shift follows a rally on Wall Street after the United States and Iran reached a peace deal that would include reopening the Strait of Hormuz.
But key details of the deal, removing mines and reinstating shipping insurance, top the list of practical obstacles to pre-conflict oil and gas supply levels.
“We are of the view that the reopening of the strait will continue to be a challenging logistical process regardless of the start date,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.
“While we expect an increase in traffic after ships spend 100-plus days at sea in the Gulf, we think it will take months to reach anything close to February 27 levels (especially if the security environment remains unstable) and that the peak of the Hormuz flow may actually be in the rearview mirror.”
Energy stocks were the only sector in the green at midday, rising 1.1 percent as oil prices stabilized after Monday’s sell-off, supporting recoveries in Woodside, Santos and coal producers.
The picture was not so clear for refinery operators after Viva rose 1.9 percent to $2.16 and Ampol was traded.
Fundamentals fell as BHP and Rio Tinto faltered after a strong start to the week, offsetting a continued rise in gold stocks as the precious metal rose to US$4,318 per ounce ($A6,112).
Financials also fell, with CommBank, NAB and Westpac each losing around 0.6 per cent as stakeholders continued to bemoan the federal government’s planned tax change at the Senate inquiry.
Consumer discretionary and IT stocks underperformed the broader market, with each sector down 1.6 percent.
In company news, shareholders of logistics group Qube have voted for its takeover by a consortium led by Macquarie Asset Management.
Elon Musk’s much-hyped and recently listed SpaceX company has soared to a valuation of over US$3 trillion ($A4.2 trillion) in after-hours trading in the US.
“However, liquidity is significantly lower than during normal market hours, often resulting in wider spreads and higher volatility,” said IG market strategist Tony Sycamore.
The Australian dollar was buying 70.62 US cents, down slightly from 70.75 US cents at 5pm on Monday.
Economists are widely tipping the Reserve Bank of Australia to keep the official cash rate at 4.35 per cent on Tuesday.
But markets will be watching RBA governor Michele Bullock’s speech closely for clues about the central bank’s path forward.
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
