By Greg Peel

The Dow fell 93 points or 0.6% while the S&P lost 0.6% to 1697 and the Nasdaq dropped 0.7%.

The rate cut we had to have and knew was coming surprised no one yesterday, with the RBA cutting by 25bps to 2.5%. "At today's meeting, and taking account of recent information on prices and activity, the Board judged that a further decline in the cash rate was appropriate." This was about the only part of the RBA statement differing from the July statement, other than the Aussie has now fallen 15% instead of 10% and the GDP result proved the Australian economy is growing below trend. The central bank has not now shut the door, leaving scope for yet another cut assuming inflation continues to behave itself.

Which inflation? The weak ANZ jobs ads series release yesterday confirmed one reason why a rate cut was appropriate but the 2.4% jump in June quarter Australian house prices, the biggest move in three years, had some observers warning of the risk of an RBA-fuelled housing bubble. The RBA is not oblivious to asset price inflation, so no doubt it is watching both house prices and share prices closely, as well as the CPI.

Meanwhile the US central bank was back in the frame last night. Seriously, there really should be a law against Fedheads rambling on about policy when they don't really have anything concrete to add. Let the chairman be the mouthpiece. The US stock indices are looking a bit tired at the top after a 19% rally (S&P) this year and summer-thin trading is not assisting. There was more Fed-speak last night suggesting tapering could begin in September which was enough to ensure weakness in stocks, despite the same Fed-speak suggesting "or maybe not".

Credit Suisse also downgraded Dow giant IBM to Underperform last night which sent its shares down 2% or almost 40 Dow points.

Unfortunately we have another agonising month to go before we find out whether or not the Fed will begin tapering in September. At least it's a change from the broken August record of wondering whether the Fed will increase QE ? the one that's played out over the past three years ? but we're still tediously sitting and waiting for Bernanke while his minions continually put in their two bob's worth, like we do every goddamned year.

There's also an election in September. No, not that one, although getting that one out of the way will not only save every Australian's sanity, it will likely provide the stock market with some relief. I speak of the German election. And then there's the US debt ceiling debate, yet again. Did I mention broken records?

The US dollar traded lower last night, falling 0.3% to 81.62 on its index, which is actually an opposite response if tapering expectations are heightened. Forex traders played the RBA rate cut on a "sell the rumour, buy the fact" trade hence the Aussie is up 0.7% to US$0.8986, despite the door being left open. Gold decided to be worried about tapering nevertheless, and a breach of 1300 spurred on the sellers. Gold is down US$19.50 to US$1282.70/oz.

London metal traders don't really care either way, but they do care that there's a raft of Chinese data due later in the week. Moves were again mixed, with copper steady but aluminium falling 1%. The oils basically followed Wall Street down, with Brent falling US57c to US$108.13/bbl and West Texas falling US$1.09 to US$105.47/bbl.

Spot iron ore jumped US$1.20 to US$131.40/t.

The SPI Overnight fell 19 points or 0.4%.

After the bell, Twenty-First Century Fox ((FOX)) ? the entertainment half of the News Corp break-up ? posted a strong revenue beat and its shares are up 3.2% in the aftermarket. Dow stock Walt Disney was not so lucky, and it's down 1.8%.

We have housing finance data out today in Australia although it is notable all majors bar ANZ Bank ((ANZ)) dropped their mortgage rates immediately by 25bps with Westpac ((WBC)) looking to recover lost share on a 28bps cut. ANZ is the sensible bank that ignores the overnight cash rate and instead looks at overall funding before making a once a month decision on rates.

On the local stock front, Endeavour Mining ((EVR)) is due a quarterly production report while FlexiGroup ((FXL)) will report its full year result.

Rudi will appear on Sky Business this evening at 5.30pm.