It was a dramatic day on the local sharemarket, which posted its biggest intraday swing of the year as bank stocks oscillated wildly and and Rio Tinto rallied.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The turbulence came despite the October meeting of the Reserve Bank of Australia delivering no surprises,
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each dipped 0.2 per cent, on Tuesday to 5284.2 points and 5284.8 points respectively, after pushing as much as 1.6 per cent lower in the morning.
As was universally tipped by economists, the Reserve Bank elected to keep the official cash rate at its record low 2.5 per cent. Rates have now been steady since August 2013.
Shares and the dollar each got a bounce following the announcement.
"October's RBA announcement highlights that the impact on the economy of recent declines in the dollar has been lessened by the fall in commodity prices," Pitcher Partners director of wealth management David Lane
said.
Mining was the strongest sector, up 1.4 per cent as the biggest miners led the bourse.
Australia's biggest iron ore miner, Rio Tinto, jumped 4.3 per cent to $60.07 after the company confirmed that it had been approached, and rejected, a takeover offer from Swiss mining giant Glencore in August.
This led some to question whether Glencore might launch a hostile takeover bid, but most equity experts think this would prove too dilutive.
JP Morgan resource analyst Lyndon Fagan told clients the prospect of a Glencore - Rio Tinto merger in the coming year was unlikely.
BHP Billiton, Australia's biggest resource company, rallied 1.7 per cent off a 2014 low to $33.24 as investors digested a plan unveiled by the company on Monday to overtake main rival Rio Tinto as Australia's lowest cost iron ore producer.
Deutsche Bank analysts confirmed their "buy" recommendation on BHP Billiton, while JP Morgan analysts re-iterated their "neutral" stance.
The published spot price for iron ore, landed in China, was unchanged amid a national holiday. Pure play iron ore miner Fortescue Metals Group rose 4.2 per cent to $3.44.
Evolution Mining was the best-performing stock in the ASX 200, climbing 8.3 per cent to 72¢, as a swag of junior goldminers bounced back after slumping the previous day when the spot price for gold dipped to below $US1200 per ounce for the first time this year.
When the ASX closed on Tuesday, the precious metal was fetching $US1205.74 per ounce. Australia's biggest gold producer, Newcrest Mining, gained 0.4 per cent to $10.
Early in the session, each of the big four banks were down by more than 2 per cent. But despite rallying on the assurance of a continuation of record low interest rates, none of them managed to eke out a gain.
Commonwealth Bank of Australia fell 0.5 per cent to $75.77, ANZ Banking Group dipped 0.1 per cent to $31.51, and National Australia Bank fell 1 per cent to $32.38. Westpac Banking Corporation was unchanged at $32.42.
"After big sell-offs since the start of September the banks are almost approaching reasonable valuations again," Perpetual portfolio manager Vince Pezzullo said.
Mr Pezzullo said he remains uncomfortable about the price multiples being paid for high yielding stocks, such as the banks, and thinks Telstra Corporation still has even further to fall before it is attractively priced.Telstra lost 0.2 per cent to $5.39.
Woolworths lost 0.4 per cent to $34.06, while Wesfarmers, owner of Coles, fell 0.5 per cent to $42.
