Australia Market falls for third day

Headline indices of the Australia share market closed down for third straight session on Tuesday, 16 July 2019, as risk aversion selloff continued after minutes from the Reserve Bank's July meeting dampened the equity market's expectations of further interest rate cuts. At closing bell, the benchmark S&P/ASX200 index fell 12 points, or 0.18%, at 6,641 points, while the broader All Ordinaries shed 10.40 points, or 0.15%, at 6,735.80.

The materials sector finished Tuesday's session on a neutral footing after a fall from Rio Tinto offset gains posted by the other iron ore majors, BHP Group and Fortescue Metals. Rio's quarterly update released on Tuesday included further details on problems with the Oyu Tolgoi underground expansion project. An estimated cost blowout of up to A$2.69 billion resulted in a 0.64% fall in the share price to finished the session at A$103.25. In contrast, BHP Group rose 0.39% to A$41.16 and Fortescue Metals climbed 1.7% to A$9.

 

The major banks also weighed on the market. Commonwealth Bank dropped 0.3% to A$80.85, Westpac lost 0.5% to close at A$27.66 and ANZ was relatively flat, closing at A$26.99. It was National Australia Bank that managed the biggest loss among the big four, ending the session at A$26.84, down 0.7%.

ECONOMIC NEWS: RBA Policymakers To Continue Monitoring Labor Market Closely-- The Reserve Bank of Australia said policymakers will continue monitoring the labor market closely and expressed willingness to adjust policy further if required. According to the minutes of the meeting held on July 2, the board observed that the lower interest rates would provide more Australians with jobs and helps in achieving the inflation target. The minutes said, "The Board would continue to monitor developments in the labour market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time." At the meeting, the central bank had reduced its key interest rate by 25 basis points to 1.00%. This was the first back-to-back rate cut since mid-2012. The bank had reduced its rate by 25 basis points in June. Wages growth remained low overall despite a moderate pick up in the private sector wages. The spare capacity was likely to remain in the labor market for some time, the minutes noted.

CURRENCY NEWS: The Australian dollar was little moved against the U.S. dollar on Tuesday. The Aussie dollar is buying 70.34 US cents, from 70.33 US cents on Monday.

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