Reuters: Hot Stocks: Australia shares slip, investors cautious ahead of RBA outcome

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Australia shares slip, investors cautious ahead of RBA outcome Aug 6th 2013, 02:06 Mon Aug 5, 2013 10:06pm EDT (Adds analysis, quotes, stocks on the move) SYDNEY/WELLINGTON Aug 6 (Reuters) - Australian shares fell 0.4 percent on Tuesday morning after Wall Street dipped overnight, with investors exercising caution ahead of the company earnings season and a widely expected rate cut by the Reserve Bank of Australia due later in the day. The financials sector underperformed as investors cashed in on high-yielding stocks after a stellar performance from the banks this year. Top lender the Commonwealth Bank of Australia fell 0.8 percent while National Australia Bank dipped 0.6 percent. The big four banks have posted on average some 20 percent gains in share price since the beginning of the year. The S&P/ASX 200 index fell 20.6 points to 5,090.7 in another session of thin trade where approximately 187 million shares changed hands by 0151 GMT. The market's daily average volume was at 600 million shares last week. The benchmark eased 0.1 percent on Monday. "The market's in a bit of a hiatus at the moment, waiting for the Reserve Bank decision this afternoon," said Michael Heffernan, senior client adviser and economist at broker Lonsec. High yielding defensives were mostly trading lower. Grocery giant Woolworths Ltd shed 0.9 percent while CSL Ltd lost 1 percent. Top telecommunications provider Telstra Corporation Ltd bucked the trend, edging 0.2 percent higher. Cochlear Ltd added 0.1 percent after reporting a 16 percent fall in its full-year profit on Tuesday, in line with expectations as the world's biggest maker of hearing implants was hurt by a drop in foreign exchange-related profits. "[A rate cut would be] excellent for the major-dividend stocks, its those stocks that are going to be major beneficiaries of low interest rates in the short run," Heffernan said, noting that general depositor accounts yield between 2-3 percent while Telstra has a dividend yield at 5 percent fully-franked, making its stock more attractive. Australia's central bank meets on Tuesday at 0430 GMT where markets are expecting the cash rate to be cut to a record low of 2.5 percent.. Dovish comments from the central bank governor Glenn Stevens, a low inflation level and flat sales growth have fuelled rate cut expectations. On Monday, the Dow and the S&P 500 pulled back from record highs and provided a weak lead for the Australian market. New Zealand's benchmark NZX 50 index slipped 0.3 percent or 15.2 points to 4,574.3. STOCKS ON THE MOVE * Service Stream plummeted 17.9 percent to all-time lows of A$0.12 after its joint venture dropped contracts to build Australia's national broadband network (NBN) in two states. (0152 GMT) * Units in the Fonterra Shareholders Fund, which offers outside investors exposure to the dividend stream of dairy farmers, rebounded more than 2 percent to NZ$7.00, as the fallout from the scare over some contaminated dairy products eased. The stock had fallen as much as 9 percent on Monday, before closing down 4.5 percent at NZ$6.86. (0024 GMT) (Reporting by Thuy Ong and Gyles Beckford; Editing by Shri Navaratnam) Link this Share this Digg this Email Reprints

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