Australian stocks slip even as central bank cuts benchmark interest rate to record low

Energy Associated Press

Australian stocks slipped Tuesday even as the central bank cut interest rates to a record low to stimulate the limping economy. Stocks elsewhere in the region were mostly lower with two major markets closed.

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KEEPING SCORE: Australia's S&P/ASX 200 briefly surged after the rate cut announcement but was later down 0.3 percent at 5,812.80 on indications the central bank probably won't cut rates further. Hong Kong's Hang Seng slumped 1.2 percent to 27,786.23 and the Shanghai Composite Index in mainland China lost 2.1 percent to 4,388.13 as initial optimism faded over possible further stimulus after poor factory data on Monday. Benchmarks in Taiwan and Singapore fell while New Zealand's rose. Markets in Japan and South Korea were shut for holidays.

DECISION DOWN UNDER: The Reserve Bank of Australia cut interest rates by a quarter percentage point at its board meeting, as many economists had expected. That brings the central bank's policy interest rate to an all-time low of 2 percent, providing additional monetary support for stocks and other financial assets. Australia's economy is struggling as growth slows in China, its major market for iron ore and other commodity exports.

ANALYST VIEW: Investor enthusiasm waned after the rate cut because language in the central bank's statement was a bit more upbeat than expected, signaling that this will probably be the final dollop of stimulus, IG Markets strategist Stan Shamu wrote in a commentary. "In a nutshell, it gave no hint of further easing and sounded like it is done with this easing cycle," he said.

WALL STREET: U.S. stock benchmarks closed just short of a record, assisted by some positive earnings reports. The Dow Jones industrial average climbed 0.3 percent to 18,070.40 and the Standard & Poor's 500 rose 0.3 percent to 2,114.49, within three points of its all-time high reached on April 24. The Nasdaq composite gained 0.2 percent to 5,016.93.

ENERGY: Benchmark U.S. crude fell 10 cents to $58.83 in electronic trading on the New York Mercantile Exchange. The contract fell 22 cents to close at $58.93 a barrel on Monday. Brent crude fell 7 cents to $66.38 a barrel in London.

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CURRENCIES: The dollar slipped to 120.10 yen from 120.11 yen in the previous trading session. The euro fell to $1.1127 from $1.1147.