Australian shares fell on Wednesday after Wall Street declined for a third day in a row, coupled with concerns that the Reserve Bank has effectively signalled the end to further cuts in interest rates.
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US stocks declined for a third session amid disappointing earnings results, while computer giant Apple shares added to some recent heavy losses, dropping 3.2 per cent to a six-month low.
The poor lead was offset to some extent by a pause in the commodities rout overnight, with oil, gold and copper all edging higher. The renewed sentiment pushed the materials sector, which includes mining stocks, up nearly 1 per cent.
But the rest of the market was in the red, with falls in all other sectors. The benchmark S&P/ASX 200 index dipped 0.4 per cent to 5674 while the broad-based All Ordinaries fell a similar amount to 5659.5.
The Reserve Bank's statement on Tuesday accompanying its decision to keep interest rates on hold was still affecting the market, said analysts. The statement appeared to suggest that with the Australian dollar at its current level, no further rate cuts would be coming.
"What's really affecting the market at the moment is the fact that the Reserve Bank's statement on Tuesday removes any reference to currency valuation," said Credit Suisse analyst Damien Boey. "People have started to think, well, currency overvaluation is not being mentioned anymore. Perhaps the Reserve Bank feels that it's done enough," he said.
"Bond yields and interest rate expectations have gone up. Also the US Federal Reserve is continuing to talk quite hawkishly in response to surveys showing strong loan demand.
"All of these things are negative for the dividend trade and that's been working itself out today."
Fortescue Metals Group was one of the day's best performers, lifting 6.2 per cent to $1.89, after announcing it was "open to commercial discussions" with potential investors in its mines and infrastructure. Its shares spiked on reports of a potential deal, with a report from Bloomberg suggesting China's Hebei Iron and Steel Group and Tewoo Group had approached the heavily indebted miner about acquiring a stake in the iron ore producer's infrastructure assets.
Among the blue-chip miners, BHP climbed 2.3 per cent to $26.49 and Rio Tinto rose 1.8 per cent to $52.98.
Among the banks, ANZ shed 0.6 per cent to $32.58, Commonwealth Bank lost 0.8 per cent to $87.37, National Australia Bank was down 0.6 per cent to $34.34 and Westpac declined 0.8 per cent to $34.49.
Heavyweight Telstra added to the sour mood, falling 1.1 per cent to $6.43.
Genworth Mortgage Insurance Australia reported a net profit of $113 million for the six months ended June 30 - a 25 per cent plunge from 2014 after the insurer lost one of its biggest clients, Westpac, in February. Shares were steady at $3.51.
Origin Energy dived 3.6 per cent to $10.61 after revealing it will take a one-off charge of about $270 million in its 2014-15 results as a result of its $1.6 billion exit from the register of New Zealand power supplier Contact Energy.
The full extent of the rapid contraction in mining was outlined in Skilled's results announced on Wednesday which showed that earnings before interest and tax, depreciation and amortisation in the group's workforce services division dropped by 35.1 per cent to $22.8 million in a weak market. Sales revenue in workforce services fell 9.6 per cent to $799.4 million.
Despite the weak result, investors showed they were glad it wasn't worse by pushing the shares 3.8 per cent higher to $1.64.
Slater and Gordon shares hit a two-year low today, falling 3.2 per cent to $3.27 as short interest in the embattled stock climb to a touch short of 42 million shares.
With the cloud of an ASIC investigation hanging over the company, the shares haven't recovered from news in late June that Quindell – the parent company of its most recent acquisition – was under investigation by British authorities.