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The utilities sector (up 0.8 per cent) retreated from early trade but was among the best performing after Origin and AGL shares went up, 0.7 per cent and 1.8 per cent, respectively, on the back of the Australian Energy Regulator’s draft decision to cut the default market offer on the eastern seaboard by as much as 10 per cent.
New Zealand-based Meridian Energy also gained 3.4 per cent.
Other strong-performing mega-cap stocks were Newmont (up 3.2 per cent), Mineral Resources (up 3.1 per cent) and Boral (up 2.4 per cent).
The concrete maker’s shares rose after its independent directors rejected Seven Group’s takeover bid, claiming the cash and scrip deal valuing the company at about $6.9 billion was not fair or reasonable and failed to account for Boral’s billion-dollar surplus property portfolio.
The laggards
Consumer staples stocks (down 0.8 per cent) recorded the greatest slump, with Woolworths and Coles down more than 1 per cent. Treasury Wine Estates fell 0.3 per cent and Endeavour Group declined 0.4 per cent.
Pro Medicus was the weakest performing mega-cap stock after its shares fell 2.3 per cent, followed by Sonic Healthcare (down 1.9 per cent) and insurance group IAG (down 1.6 per cent).
The lowdown
AMP chief economist Shane Oliver said while the Reserve Bank’s overall statement sounded hawkish, its final paragraph, which noted the board was “not ruling anything in or out”, was neutral. That dovish tilt rallied shares and the bond yields.
“The RBA moved its interest rate guidance in the final paragraph of its post-meeting statement in a clear dovish direction by replacing the sentence that ‘a further increase in interest rates cannot be ruled out’ with ‘the board is not ruling anything in or out’ suggesting that the RBA has now moved to a neutral stance on interest rates,” Oliver noted.
“Governor [Michele] Bullock indicated that this reflects the further moderation in inflation and that the risks are now more finely balanced with upside risks remaining on inflation but downside risks relating to household consumption.”
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On Wall Street overnight, the S&P 500 added 0.6 per cent, coming off its first back-to-back weekly losses since October. At one point during the day, it was on track to surpass its all-time closing high set last week.
The Dow Jones rose 0.2 per cent, to 38,790.43, and the Nasdaq Composite gained 130.27, or 0.8 per cent, to 16,103.45.
Similar to the Australian market, the highlight for Wall Street this week will likely be the Federal Reserve’s meeting on interest rates, which ends on Wednesday local time. The widespread expectation is for the central bank to hold its main interest rate steady at its highest level since 2001.
Tweet of the day
Quote of the day
“There’s a long, long way to go, but this is encouraging news,” Climate Change and Energy Minister Chris Bowen said after the Australian Energy Regulator released its draft decision to cut the default market offer. “It shows the impact of getting more renewables into the system … we’ll continue with the task at hand – that is, getting more renewables into the system, which is the cheapest form of energy available.”
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