Stocks abruptly halt winning streak

The local sharemarket’s winning streak has skidded to an end, despite the Reserve Bank’s cut.

The Australian sharemarket has ended sharply lower, bringing an abrupt halt to a six session winning run despite a rate cut from the Reserve Bank.

At the closing bell, the benchmark S&P/ASX 200 index had stumbled 46.9 points, or 0.69 per cent, to 5,540.5, while the broader All Ordinaries index softened 48 points, or 0.85 per cent, to 5,622.1.

Stocks were trading down 0.6 per cent ahead of the central bank’s afternoon decision to cut rates to a new record low of 1.5 per cent and while they enjoyed a knee-jerk bounce of 0.3 per cent initially, traders eventually decided to shun equities.

IG chief market strategist Chris Weston said the trading response was largely a story for the forex markets, with the local currency’s steady response dampening any positivity around companies seen likely to benefit from a rate cut through a lower dollar.

“This has been a rates and forex story,” he said.

“It seems the bulk of speculative currency traders were positioned for the move lower.

“The move in AUD/USD from US75.4c to US74.91c didn’t last long and we have seen buyers coming in around the May uptrend support.”

Indeed, by the end of local trade the local unit was again trading above US75.4c, meaning any investors who had positioned themselves in stocks poised to gain from a lower currency were caught out.

The energy sector was the biggest drag on markets throughout the volatile session, matching the 3 per cent slide in crude prices in the offshore session.

Santos was among the worst performers, slumping 5.8 per cent to $4.23, while Woodside dipped 2.2 per cent to $26.44.

The big miners also ended in the red, with the materials sector off over 1 per cent ahead of Rio Tinto’s half-year profit result on Wednesday.

Rio eased 0.58 per cent to $49.41, BHP Billiton skidded 2.2 per cent to $19.24 and Fortescue lost 1.1 per cent to $4.42 despite iron ore prices rising above $US60 a tonne.

The big banks were also under pressure, with all four ending in the red. ANZ outperformed in falling 0.2 per cent and Westpac lagged with a 0.9 per cent retreat as margins faced further pressure.

The media sector was under the pump, with Seven West plunging 18.4 per cent after outlining soft full-year profit expectations for 2017 and Nine Entertainment tumbling 14.3 per cent as investors feared it could deliver a similarly weak forecast,

Elsewhere, Crown rose 0.3 per cent despite a challenge to James Packer’s Sydney ambitions and Virgin bounded 4.2 per cent as it completed its capital raising.

Among blue chips, Telstra ended steady at $5.73 and Qantas added 1.3 per cent to $3.21, aided by softening oil prices.