Australian shares endured a volatile day of trading but finished in negative territory as better-than-expected economic growth figures dampened expectations of further rate cuts from the Reserve Bank of Australia.
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The market ignored solid gains on Wall Street, where the Dow Jones was up 1 per cent, and headed down from the opening bell, initially spiking after the release of the GDP numbers but then falling again.
The benchmark ASX200 closed down 0.1 per cent to 5258.3, while the broader All Ordinaries lost 0.1 per cent to 5304.7.
The third-quarter GDP numbers showed that the Australian economy grew a stronger-than expected 0.9 per cent, up from 0.2 per cent growth in the second quarter and a bit more than the 0.8 per cent analysts were expecting.
A large part of the growth was due to a surge in net exports, but housing and consumers also did their fair share to boost growth, while the ongoing decline mining investment weighed heaviest.
RBC Capital Markets senior economist Su-Lin Ong said the result was "not a bad headline number", but "that was probably always likely".
"The composition of growth probably is still a bit disappointing with only modest signs of transition," she said. "The details are still consistent with the Reserve Bank's easing bias and that sort of persistent sub-par activity suggests there is still a risk of easing next year. We have a rate cut pencilled in for the first quarter."
Bounce back
"The GDP numbers that came out this morning put the market straight up and then straight back down again," said Russell Investments portfolio analyst Andrew Zenonos. "That would be due to the good news being offset by the bad news that a rate cut is unlikely in the near future.
"I guess you could say we've also seen a few reversals of fortune at the stock levels - Slater and Gordon and Dick Smith bounced as a bit more positive sentiment flowed through the market. There was a bit of a bounce in banks as well."
In market news, one of the world's biggest resources investors said Rio Tinto will not follow its rival BHP Billiton by cutting dividends next year and has chided the companies for their "constraining"progressive dividend policies.
Michelle Lopez, senior investment manager at Aberdeen Asset Management, said the miners would be better adopting a payout ratio instead of their progressive dividend policies, which hold that their dividends will not go backwards in US dollars.
Rio's annual payout will be $US4.1 billion ($5.6 billion) this calendar year, while BHP's costs $US6.6 billion a year.
BHP was flat at $18.75, and Rio lost 0.8 per cent to $46.55.
The banks all lifted: ANZ 0.4 per cent to $27.90; Commonwealth Bank 0.9 per cent to $81.76;National Australia Bank 0.3 per cent to $30; and Westpac 0.9 per cent to $33.10. Fellow blue-chip Telstra added 0.5 per cent to $5.52.
Spotless was the biggest loser of the day, plunging 39.7 per cent to $1.32 after the cleaning and catering company issued a profit warning 18 months after its initial public offering, continuing a run of private equity exits which have run into difficulty soon after listing.
Spotless said it expects net profit to fall 10 per cent in the year to June 30, 2016, compared to the 9 per cent growth forecast by analysts.
Dick Smith bounced back 18.5 per cent after news Algy Pereira, the boss of Woolworths' Big W division, has resigned to take on a senior role at the struggling electronics retailer.
Dick Smith has confirmed Pereira has been appointed director of retail operations but denied speculation he was hired as an immediate replace for chief executive Nick Abboud. Investors and one online media outlet earlier said Pereira was tipped to replace Abboud following the retailer's profit downgrade and inventory write-down earlier in the week, which halved Dick Smith's shares price.
Slater and Gordon is continuing to recover after last week's near-wipeout, rallying 6.7 per cent to $1.26 per cent after the law firm reaffirmed its guidance earlier in the week.
Santos shares were halted at $4.06 as a narrow majority of retail shareholders in Santos took up their entitlements in the retail component of the $2.5 billion equity raising.
The low 57 per cent take-up rate still leaves $585 million of rights to be sold through a shortfall bookbuild to investors. The bookbuild was set to be completed overnight, a day earlier than Santos's original timetable.
