Market up and down

IN what has been an inconsistent and cautious week for stocks thus far, the local market reversed yesterday’s leads and took a slight tumble this afternoon, which dragged down most miners too.

Brooke Showers

The S&P/ASX 200 opened at 4346 points and remained fairly steady until after midday when it slumped to 4338 points, and finally closed 21.8 points lower at 4339.4.

The Reserve Bank of Australia released its forecast for business investment using the capital expenditure survey today.

According to the report, business investment accounted for around 17% of Australia’s gross domestic product in the first half of the year and was expected to increase over the next year, driven by investment in large-scale mining projects.

The RBA said mining capital expenditure fell by 7% in 2009/10 reflecting deferrals of spending by mining firms following the global financial crisis and associated falls in commodity prices.

Since then, mining investment had risen more than 130% and was expected to post a further sharp increase in 2012/13, underpinned largely by LNG projects.

However, the RBA said capex expectations data had tended to over predict the upswing in mining investment over the past two years which could affect some of the growth predicted.

“The latest expectations data for 2012/13, contained in the June quarter 2012 capex survey suggest that mining capital expenditure could increase anywhere between 30 and 50 per cent,” the survey cited.

Meanwhile, the Melbourne Institute Survey of Consumer Inflationary Expectations reported the median expected inflation rate remained unchanged at 2.4% in September which is within the RBA's target band of 2 - 3%.

The expected pay growth over the next 12 months declined further, to 1.7% in August, down from 2.4% in May and 3.5% in February.

“Inflationary expectations seem to have stabilised after a hike in July,” Melbourne Institute research fellow Dr Viet Nguyen said.

“Moderate inflationary expectations along with plummeting wage expectations should be music to the ears of monetary policy makers – they provide wiggle room for monetary easing should economic activity show further signs of slowing.”

BHP Billiton failed to impress with shares falling marginally by 7c to $A32.78 while Rio Tinto was down 4c to $55.05.

Soaking up market sentiment, the largest loss on the Final Call watchlist was felt by iron ore major Fortescue Metals Group which lost nearly 14% to $3.

Junior iron ore explorer Rico Resources sunk by 11% to 7.1c and Regal Resources and Zambezi Resources’ shares both plummeted by 25%.

Both Luiri Gold and Thor Mining entered trading halts pending announcements and Northern Mining entered a trading halt regarding an announcement for a capital raising.

Argonaut Resources responded to a price query from the ASX, stating is was not aware of any information which was not announced to explain a recent trading movement which resulted in shares jumping from 5.3c to 8.4c on August 30.