ASX Market Wrap: ASX up – just – and again underperforms the Dow

Rates, rates, rates… plus the biggest winners and losers

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After a strong lead from Wall Street and an optimistic increase in the ASX SPI futures this morning, the ASX looked set for good gains today.

In what seems to be an ongoing trend, the market itself was more pessimistic than either of those data points would suggest.

The S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) closed up only 0.1% to 4,435.9 points while the All Ordinaries (Index: ^AORD) (ASX: XAO) managed to do slightly better, up 0.2% to 4,5014.8.

That result compares reasonably poorly to the lead from US markets, where the Dow Jones Industrial Average closed up 0.5%, and the S&P 500 finished with a 0.6% gain.

More rates news

The banks were – unsurprisingly – in the news today, in the wake of yesterday's cut in the official cash rate by the Reserve Bank of Australia. Government politicians were today calling for the banks to reflect the full 50 basis point cut that the RBA had decided to implement, but the only two major banks who had announced changes by the end of trading today declined to acquiesce to those demands.

Instead, National Australia Bank (ASX: NAB) reduced rates by 32 basis points (0.32 percentage points) today, while Bank of Queensland (ASX: BOQ) announced yesterday that it would pass on a 35 basis point cut to its mortgage holders.

Banks – and the less partial commentators – are arguing that the smaller reductions are in recognition of the reality that the banks don't just source their funding from Australian depositors, but also from international markets, which haven't seen a similar reduction. Treasurer Wayne Swan this morning told Sky Business he didn't really care about declining bank margins – but then he has an unsympathetic electorate to mollify.

Bank profit growth will be difficult

Fellow bank ANZ (ASX: ANZ) was in the news this morning, releasing earnings figures of its own. ANZ topped NAB's recent earnings, with a 10% profit increase (6% on an underlying basis) to be the best-performed of the big four banks on the most recent round of profit announcements. ANZ CEO Mike Smith confirmed what we've been saying for a while now – we are in a new world of 'persistently lower credit growth' which is not good news for banks – or their shareholders

While ANZ has its own new timetable of interest rate changes that it will follow, the market (and mortgage holders) are eagerly awaiting announcements from the Commonwealth Bank (ASX: CBA) and Westpac (ASX: WBC).

Late to the party… but at least they made it

Investors have continued to cheer the news that Woodside (ASX: WPL) has finally commenced production at its Pluto field off Western Australia. The company endured cost blowouts and delays, but has finally brought the field on-stream. Woodside shares were up 1.3% today.

Meanwhile, Singapore Telecom (ASX: SGT) –owned Optus today announced it was shedding 750 jobs as part of a broad restructure, the media sector continues to reorganise with APN News & Media (ASX: APN) looking to do deals in New Zealand, and Telstra (ASX: TLS) has outlined its plans to grow by selling new products on the coming NBN network.

Winners and losers

With shares up 0.1% today, there were some key winners and losers among the sub-indices. Leading the charge were the Health Care sector, up 0.9%, Energy, which put on 0.7% and Materials and Property, which both added 0.6%. The laggers included the Utilities sector, down 1.9%, Financials-ex-Property, down 0.4% and Financials, which lost 0.3%.

Among the individual ASX 200 component companies, five managed a gain of over 3.5%, including Sandfire Resources (ASX: SFR) and Beadell Resources (ASX: BDR), which put on 4.3%, Stockland (ASX: SGP), which gained 4.2%, Regis Resources (ASX: RRL), which added 4%, and Dart Energy (ASX: DTE), which gained 3.6% on the day.

Five ASX 200 companies lost more than 4% today, the worst being APA Group (ASX: APA), down 6.4%, (ASX: WTF) – which we covered yesterday – and Energy World Corporation (ASX: EWC) which both lost 4.3%, Mirabela Nickel (ASX: MBN), off 4.2% and the struggling JB Hi-Fi (ASX: JBH) which continued its sorry run, closing 4.1% lower, having lost almost 25% over the past three months.

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Scott Phillips is an investment analyst with The Motley Fool. Scott owns shares in Telstra – and has a mortgage. You can follow him on Twitter @TMFGilla. Take Stock is The Motley Fool Australia'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, whilst it's still available. This article contains general investment advice only (under AFSL 400691).

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