Market rises on hopes of interest rate cut

The share market made solid gains today on hopes the Reserve Bank (RBA) will cut interest rates tomorrow, while positive Chinese manufacturing figures also helped.

The All Ordinaries added 0.5 per cent to 4,540 and the ASX 200 was up 57 points to 4,532.

A broad gauge of China's manufacturing activity has risen to a 13-month high, underlining the nation's economic recovery and helping Australia's resources sector to gains midway through the session.

They could not be sustained though and the sector ended down a quarter of a per cent.

Rio Tinto did most of the damage, off a third of a per cent, while Newcrest lost 1.5 per cent.

The major banks ended mostly higher; Commonwealth led, up almost 2 per cent while NAB ended flat.

Today kicked off a big week for data and it was not a great start.

Data today revealed job advertisements fell for the eighth straight month in November, down 17 per cent for the year.

Manufacturing activity declined for the ninth straight month and October's retail sales fell flat.

ABS business indicators shows company profits are down 13 per cent for the September quarter when compared to a year ago.

They have fallen for four straight quarters now.

This all prompted the predictable demands from industry leaders for the Reserve Bank to cut the cash rate tomorrow.

While most economists believe that will happen, some disagree.

TD Securities believes the bad news on the economy is not bad enough to prompt the RBA to move this month, and it is likely to hold its fire until things get worse next year.

Today's data affected the Australian dollar however, dropping a quarter of a cent against the greenback on expectations the cash rate will be cut, which effectively devalues the dollar in the eyes of investors.

Just before 5:30pm (AEDT) it was buying 104 US cents, 79.8 euro cents, 64.8 British pence and 85.6 Japanese yen.

West Texas crude was worth $US88.50 a barrel, Tapis was up to $US118 a barrel, while spot gold was down to $US1,718 an ounce.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9265-0.0022-0.23%
    AUDUSD=X
    0.5517-0.0018-0.32%
    AUDGBP=X
    0.6702-0.0019-0.29%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg