Headline indices of the Australian equity market were mixed on Tuesday, 02 July 2019, as gains for heavyweight miners were offset by losses in financials amid lending margin pressure woes after the Reserve Bank of Australia slashed its cash rate by 25 basis points to a new all-time low of 1%. At closing bell, the benchmark S&P/ASX200 index edged down 0.10 point, or 0.00%, at 6,648.00 points, while the broader All Ordinaries rose 4.50 points, or 0.07%, at 6,735.90.
Shares of materials and resources inclined after iron ore prices scaled a record high on Monday. Tight supply and expectations of higher steel prices have seen increased demand for iron ore. Global miners BHP Group rose 1% to an over eight-year high, and Rio Tinto, jumped 1.5%. Fortescue Metals Group, the world's fourth largest miner, rallied 1.5%. Mining contractor CIMIC Group also rose about 1%.
Healthcare stocks were higher, with CSL, up 0.6%. As CSL conducts most of its business overseas, particularly in the United States, it too stands to benefit from a weaker local currency.
Financial stocks were lower, with the country's big four banks losing between 0.2% and 1%, amid prospect of bank lending margins coming under further pressure from lower interest rates after the Reserve Bank has cut official interest rates by 0.25 percentage points to a new low of 1%, the second consecutive month it has cut rates. The Reserve Bank said it would continue to cut rates if the unemployment rate didn't show any improvement. The Reserve Bank board will continue to monitor developments in the labour market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time, the bank said.
Speedcast International (SDA) slumped over 35% after downgrading underlying EBITDA expectations. The group provides remote communications and IT services to a range of sectors including Maritime, Energy, Mining and Media, in addition to NGO's and Government customers. SDA cited broad influences such evolving market conditions and recent commercial developments as factors resulting in lowered earnings guidance. FY19 Underlying EBITDA guidance is now seen being between US$140 - US$150 million, compared to a previous estimate of between US$160 - US$171 million.
CURRENCY NEWS: The Australian dollar was up against the U.S. dollar on Tuesday, after RBA announced the highly anticipated 25 bps rate cut to 1.00%.