Market Wrap / dovish tilt

The local sharemarket closed lower Tuesday, although some earlier falls were stemmed in late trade when the Reserve Bank delivered a somewhat dovish tilt in its latest policy decision.

The S&P/ASX 200 fell by 30 points or 0.4% to 8393.

The RBA left the official cash rate on hold at 4.35% as expected at its final meeting of the year, however importantly the accompanying statement did not include the statement that the board was “not ruling anything in or out.” At the post meeting media conference, RBA Governor Michele Bullock said the board did not explicitly consider a rate cut.

Responding to a question from ausbiz about whether the board had done some scenario analysis on the impact of President-elect Trump, Bullock said “I think where our scenario suggesting it may impact us more was if there are some big impacts on China. If that impacts their demand for exports from us, then that impacts our economy.”

The financial sector fell 1.7%.

Materials were the best performers, rising on the back of China’s stimulus measures. The sector gained 3% while BHP rose 3.1% and Fortescue added 6.2%.

Elsewhere, Treasury Wine Estates gained 4% after announcing it will be acquiring 75% of China’s Stone & Moon Winery in an $18 million deal. The asset furthers the winemaker's strategy to support its luxury-wine portfolio. 

Platinum Asset Management shares were down a further 2.2% after disclosing it could face a tax bill exceeding $500 million related to the sale of assets to private equity giant KKR, casting doubt over the viability of the entire deal.

IAG dropped 1.7% after the insurance company expressed its intention to defend itself against a class action being put forward to the Supreme Court of Victoria.

Some of the year’s best performing stocks were today’s worst performers. Pro Medicus fell 9% while Megaport was down 5.4% and WiseTech lost 4.4%.

The Aussie dollar fell below US64c following the RBA decision.