Australia's largest banks are once again leading the market's downward charge today as the impact of the Reserve Bank of Australia's decision on interest rates continue to be felt. Investors and analysts alike had widely expected further easing in the cash rate in the lead up to Tuesday's meeting with investors piling their money into the nation's high-yielding dividend stocks, including the big four banks.
Instead, the central bank elected to leave them unchanged at 2.25%, throwing the share market into an immediate frenzy. Since peaking at 5996.9 points on Tuesday less than 0.1% shy of the 6000 target the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has retreated by 2%, led down by those same dividend stocks that recently drove it to a fresh seven-year high.
Here's how they have performed since the meeting:
Commonwealth Bank of Australia (ASX: CBA) down 3%
Australia and New Zealand Banking Group (ASX: ANZ) down 1.8%
Westpac Banking Corp (ASX: WBC) down 3.1%
National Australia Bank Ltd. (ASX: NAB) down 2%
Telstra Corporation Ltd (ASX: TLS) down 2.3%
All five stocks have extended their falls today with some investors even fearing a large pullback in the near future. However, there is still scope for further interest rate cuts in the upcoming months. Most analysts are expecting one by May at the latest, which could suggest the pullback in those stocks mentioned above will only be temporary.
Still, investors need to be cautious. While the big four banks and Telstra could show signs of strength in the near future, their shares remain overpriced and do not present as good buys for long-term investors. In order to beat low interest rates, Foolish investors would be wise to explore some of the market's other great dividend opportunities, including the ultra-promising one recently highlighted by our top analyst.