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The share market started well but faded badly as a capital raising from Westpac proved a heavy handicap on Melbourne Cup Day.

A 39-point opening rally dwindled to a gain of seven points or 0.1 per cent for the ASX 200 at 6694 by mid-session. Trading volumes were compromised by a public holiday in Victoria and caution ahead of a Reserve Bank rate decision this afternoon.

The principal culprit for the heavy going was Westpac, whose shares sank 89 cents or 3.2 per cent to $26.99 after the bank completed a capital raising. The bank raised $2 billion by issuing 79 million new shares to institutional investors at $25.32 following a bookbuild. Retail shareholders in the bank will be offered the opportunity to buy shares.

The damage to the index was cushioned by partial rebounds in the other big three banks. CBA bounced 1 per cent off yesterday’s two-month low. ANZ added 0.4 per cent and NAB 1.2 per cent. Macquarie Bank, which reported on Friday, had a record close within reach after rising 1 per cent.

Gains in the big miners limited the index’s morning fade as signs of improvements in the Chinese economy and optimism over a trade deal outweighed growing pressure on iron ore prices. Fortescue rallied 1.4 per cent to a new all-time high. Rio Tinto advanced 1.3 per cent to its strongest level since early August. BHP put on 1.1 per cent. The gains flew  in the face of a one-month low in ore prices after Brazilian giant Vale announced it had permission to resume operations at one of its mines closed after January’s tailings dam disaster.

A five-week high in crude oil helped the energy sector. Woodside put on 1.3 per cent, Beach Energy 1.2 per cent and Oil Search 0.8 per cent.

Aside from Westpac, other weights on the index were Telstra and Woolworths, down 0.4 per cent, and Coles, down 0.3 per cent. A soft tech sector included falls of 2.8 per cent in Nanosonics and 1.5 per cent in Xero.  

What’s hot today and what’s not:

Hot today: a lukewarm morning on the local market left big moves in short supply as punters looked elsewhere for excitement. Gold and copper explorer Kalamazoo Resources was one of the few to record a double-digit percentage gain, climbing 10.5 per cent to a record high 33 cents just four months after raising cash at 12 cents. The company is preparing to drill in Victoria’s Castlemaine gold region.  

Not today: shares in Speedcast sagged to a two-month low after the satellite communications specialist announced its credit rating had been downgraded. S&P Global cut the company’s rating to B- from B and left its outlook as “Negative”. The company assured the market that it does not have a ratings covenant on its debt facilities, so the change will have no direct impact on funding costs. Shares were lately down 6.5 per cent.

A mixed morning on Asian markets saw China’s Shanghai Composite down 0.1 per cent, Hong Kong’s Hang Seng off 0.3 per cent and Japan’s Nikkei up 1.3 per cent. S&P 500 index futures were recently ahead two points or 0.1 per cent.

Turning to commodity markets, Brent crude futures eased 14 cents or 0.2 per cent this morning to $US61.99 a barrel. Gold futures shed $2.30 or 0.1 per cent at $US1,508.80 an ounce.

On currency markets, the dollar was broadly steady at 68.78 US cents.


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