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SYDNEY -- After a flat day on Wall Street, it promised to be a rather dull trading session here on the ASX.
And we weren't disappointed.
The Aussie dollar at one stage dropped below U.S. $1.03 on weaker-than-expected Chinese data.
Perhaps former federal opposition leader John Hewson will get his way after all. He says the RBA should continue slashing interest rates so they are in line with other developed economies, saying it would be better if the cash rate were as low as 2%. That would do some damage to the Aussie dollar but breathe some life into our ailing economy.
But don't hold your breath.
U.S. Markets were soft overnight, with the Dow Jones Industrial Average (INDEX: ^DJI ) falling 0.1% to 13,268.6 and the S&P 500 down 0.25% to 1,402.3 points. Only the Nasdaq managed to close ahead, rising 0.3% to 3,059.9.
Traders are seemingly reluctant to jump into the market at the moment, pending the U.S. nonfarm payrolls report due on Friday and an auction of three- and five-year Spanish bonds later tonight.
What happened to all the excitement about the 50-basis-point cut in interest rates? Perhaps investors realized that, in the long-term, it doesn't really change anything.
As ever, despite the market being flat on the day, we had our usual selection of winners and losers.
In the black was Westpac (NSYE: WBK) after it reported results slightly ahead of expectations. Dividend-seeking investors (and really, who doesn't like a dividend?) were skipping all the way to their local branch, the interim dividend up $0.02 to $0.82.
Commonwealth Bank of Australia did its best to trump Westpac, announcing it was cutting its standard variable interest rate by 40 basis points. National Australia Bank remains the sector's whipping boy this month, only lopping 32 basis points off its rate. Westpac and ANZ are yet to move. The tension is almost unbearable.
Harvey Norman's third-quarter 2012 sales fell 8.1%. Australian sales were the major drag, dropping a ripsnorting 9.2%. Third-quarter profit before tax fell even harder, down 44% to $42 million. That brings PBT to $205 million in the last nine months. Shares closed down 1.5% to $2.04, up from the day's low of $1.97.
No surprise, then, that fellow retailers David Jones and JB Hi-Fi also took it on the chin, falling similar amounts.
Who would be a retailer?
Woolworths -- that's who. Its shares rose 1.6%, perhaps as Australia's millions of savers cycled out of term deposits and into high-dividend shares. QBE Insurance rode the wave, too -- more than can be said of Billabong International, which saw another 2.3% wiped off its market capitalization.
Befitting a flat day on the markets, BHP Billiton (NYSE: BHP ) closed at exactly the same price it opened: $36.25. The chart below shows the day's movements in all their Technicolor glory.
Source: Yahoo Finance.
Fellow mining giant Rio Tinto spoiled the party, falling 1.1%. The AFR ran a front-page story saying soaring costs are forcing the company to review its coal expansion plans. Surely it's only a matter of days before Clive Palmer announces he'll take them off Rio's hands? Stranger things have happened (Titanic II, anyone?).
And finally, ASX Limited has reported a 2.7% fall in underlying net profit, while Iress Market Technology reported segment profit growth of just 2.9%.
Iress said short-term growth prospects look weak, but "in due course operating conditions will turn ... providing a sound basis for medium term growth." The market was having none of it, however, sending the shares down 5.3%.
One important outcome from this week's rates decision is that bank deposits continue to be less and less attractive for investors seeking income. We think that's where shares can play an important but often overlooked role.
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For more Foolish reading, check out these stories we published yesterday:
- ASX Market Wrap: ASX up – just – and again underperforms the Dow
- Fact: Apple got cheaper last week
- Freedom Nutritional: Stock jumps 138% in a year, an attractive investing proposition
- 3 ASX stocks that performed the best yesterday
- Foolish roundtable: Interest rates, Olympics and optimism
- What the RBA's interest rate cut means for ASX investors
The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, while it's still available. Bruce Jackson has an interest in CBA, WBC, ANZ, NAB, BHP and WOW. This article contains general investment advice only (under AFSL 400691).