AFTERNOON REPORT
(5.20pm AEST)

Stocks around the Asian region fell further into the red today as investors reacted to the decision by ratings agency Standard and Poor's to downgrade the long-term credit rating of the United States from AAA to AA+. Investors and traders remained on edge despite the Group of Seven industrial nations pledging a coordinated effort to ensure financial markets have enough liquidity.

The All Ordinaries Index (XAO) fell 113pts or 2.7pct to 4056.7 while the S&P/ASX 200 Index (XJO) lost 119.3pts or 2.9pct to 3986.1, a fresh two year low.

At 5pm AEST the Dow Jones Futures index was pointing to a fall of 148pts or 1.3pct when Wall Street opens later tonight.

Japan's Nikkei Index fell 2.2pct, the Shanghai Composite was down 3.8pct while New Zealand's share market eased by 2.8pct. The Straits Times in Singapore shed 3.7pct while Hong Kong's Hang Seng Index lost 3pct.

Every sector on our market closed in the red, despite an attempt at a relief rally in early trade. At its highs for the day, the All Ords was down just 20pts at 12pm AEST.

Financial stocks took another beating. Shares in Westpac (WBC) fell 2.2pct to $18.84 while the National Australia Bank (NAB) fell 4pct to $20.90 and the ANZ (ANZ) lost 3.1pct to $18.50. Shares in the Commonwealth Bank (CBA), fared better, down 1.4pct to $45.62 ahead of the group's full year result which is being released to the market on Wednesday morning. Macquarie Group (MQG) shares fell 1.7pct to $22.86, despite an earlier rally driven by bargain hunters in the wake of Friday's 7pct slump.

Bendigo and Adelaide Bank (BEN) today reported a 41pct increase in FY profit to $324.1 million. Shareholders will receive a final fully franked dividend of 30 cents per share, taking the full year payout to 60 cents, up from 58 cents the previous year. BEN shares fell 1.5pct to $7.95.

The energy sector eased by 2.5pct despite a bounce on open. Shares in Woodside Petroleum (WPL) closed down 2pct to $33.81 while Oilsearch (OSH) was weaker by 2.9pct to $6.08.

Mining players also eased further into the red. Rio Tinto (RIO), one of Friday's biggest casualties, fell 4.7pct to $68.63 while BHP Billiton (BHP) lost 4pct to $36.60. Iron ore miner Fortescue Metals Group (FMG) closed down 2.6pct to $5.59.

Rio Tinto and Mitsubishi made a complete joint takeover offer for the shares in Coal and Allied Resources (CNA) they don't already own, valuing Australia´s sixth-largest coal miner at
$10.6 billion. If accepted, CNA shareholders will receive $122 for each share not already owned by RIO and Mitsubishi, and retain the recently declared dividend of $1.20 per share. CNA shares rose 28pct today to $116.20.

The price of gold rallied to a fresh record high on safe haven buying. Gold futures for December delivery jumped to a record $1,715.60 an ounce on the Comex in New York, while the spot gold price was trading at US$1709.79 at 4pm AEST. Shares in AngloGold Ashanti (AGG) rose 3.4pct to $8.21 while Eldorado Gold (EAU) climbed 3.3pct to $17.15 but Newcrest Mining (NCM) lost $38.82.

Retailer JB Hi-FI (JBH) today reported a 7.6% fall in full year profit to $109.7 million, describing the current retail environment as "challenging". The result was impacted by costs associated with restructuring the Clive Anthony stores to the JB Hi-Fi brand. However JBH plans to open 16 new stores in 2012 and will pay shareholders a full year dividend of 77c per share, up from last year's 66c. JBH shares fell 2.4pct to $14 while Myer Limited (MYR) was lower by 3.2pct to $2.14. Harvey Norman (HVN) fell 5.1pct to $1.86 and Kathmandu (KMD) lost 5.9pct to $1.60.

Defensive stocks failed to hold up, with Telstra (TLS) closing down 2.8pct to $2.81 and Woolworths (WOW) lower by 2.3pct to $24.91.

In economic data released today, the national average Australian price of unleaded petrol fell by 0.5 cents per litre to 141.5 cents a litre in the week to August 7. CommSec expects prices to ease further as global growth concerns dominate sentiment. As such CommSec expects pump prices to fall by 2-4 cents a litre over the next fortnight.

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Meanwhile, the ANZ job advertisement index fell by 0.7pct in July after rising by 3.8pct in June. Job advertisements are still up 8.3pct on a year ago.

The Australian dollar was heavily sold off in line with equity markets. At 4pm AEST the Aussie was buying US103.09c, £0.6279 and €71.9c.

On the market overall, a total of 3.17 billion shares were traded, worth $7.95 billion. 196 were up, 1039 were down and 313 were unchanged.

At 4.15pm AEST on the ASX24, the futures contract was at 3982, up 29ts.

Ahead tonight, US investors will respond to the credit ratings downgrade. There is no economic data being released.

(From Juliette Saly, CommSec Market Analyst)

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