MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket has managed to end higher by the most modest of margins for the third time this week despite being around 0.4 pct lower at one point this morning.

The ASX 200 index (XJO) ended 0.5 pt stronger to 4605.5 while the broader All Ordinaries index (XAO) rose 0.1 pct or 2.5 pts to 4666.1. Several sectors lost ground, however modest improvements from the healthcare, financial and industrial stocks lifted the market higher.

The S&P/ASX 200 Materials index rose 0.03 pct or 4.4 pts to 13622.6 today. One of the biggest contributors to the gains was gold producer Newcrest Mining (NCM) which rose 0.92 pct or 35 cents to $38.50.

Australia's largest miner, BHP Billiton (BHP) fell 0.07 pct or 3 cents to $44.42 while RIO Tinto (RIO) dropped 0.06 pct or 5 cents to $83.55.

The price of oil ended just a touch lower overnight, with Santos (STO) rising 0.3 pct or 4 cents to $13.35 and the larger Woodside Petroleum (WPL) fell 0.05 pct or 2 cents to $40.90.

The S&P/ASX 200 Financials index rose 0.03 pct or 1.4 pts to 4266.7. Australia's major banks ended mostly lower with the exception of National Australia Bank (NAB) which rose 0.24 pct or 6 cents to $25.02. ANZ Banking Group (ANZ) fell 0.37 pct or 8 cents to $21.77, Commonwealth Bank of Australia (CBA) dropped 0.16 pct or 8 cents to $51.39 and Westpac (WBC) eased by 0.09 pct or 2 cents to $21.87.

The S&P/ASX 200 Consumer Discretionary index fell 0.49 pct or 6.7 pts to 1363.5. Discount retailer, JB Hi-Fi (JBH) rose 2.35 pct or 39 cents to $16.98 and Australia's largest specialty retailer Harvey Norman gained 1.63 pct or 4 cents to $2.50. Department store owner, David Jones (DJS) rose 1.79 pct or 7 cents to $3.97 while its competitor Myer (MYR) improved by 2.33 pct or 6 cents to $2.63. Despite today's gains, MYR is still trading close to its all time lows.

Tiger Airways flights were initially suspended until this Saturday, however all its domestic flights will now remain out of action until at least the end of the month. Tiger has said they will refund fares to customers who hold tickets for flights from today until the end of July. The airline's current CEO, Crawford Rix will step down at the end of the month.

Tiger Airways (TGR;sp) in Singapore trade is down 2.4 pct following the news.

QAN gained 0.5 pct or 1 cent to $2.00 today while the more domestic focused, Virgin Blue (VBA) rose 9.52 pct or 3 cents to 34.5 cents.

Qantas (QAN) has now gained 8.1 pct this week while the smaller Virgin Blue (VBA) has gained 21 pct over the past 5 days.

International media company, Newscorp (NWS) has had an eventful few days due to a phone hacking scandal at one of its tabloid newspapers, News of the World. The paper averages sales close to 3 million copies a week and was founded back in 1843. NWS shares dropped 3.61 pct or 62 cents to $16.55.

The live cattle export ban to Indonesia which has been in place for around 1 month has been lifted. This is helping affected businesses in Australia. Elders (ELD) rose by an impressive 6.4 pct or 2.5 cents to 41.5 cents, reaching levels the stock was sitting at around 4 weeks ago. Australian Agricultural Company (AAC) gained 1.05 pct or 1.5 cents to $1.44.

On the economic front today, the latest jobs report was released by the Australia Bureau of Statistics (ABS).

The unemployment rate remained unchanged at 4.9 pct for the fourth straight month and just over 23,000 new jobs were created last month. The market was expecting an additional 15,000 jobs in June. There have been some in politics today commenting on the impressive result, saying that it is further proof of the strength of the Australian economy.

When it comes to employment, it is always important to put things into perspective, not get carried away with one month's results and to look at the performance over a longer period of time.

Commsec Economist, Savanth Sebastian said that "The latest employment data certainly looks robust - especially given the surge of 59,000 new full-time jobs. However it is just one month's data and the monthly job figures tend to be volatile. Keep in mind that the prior two months saw full-time job losses of almost 80,000. In fact the previous month's job gain of 7,800 has now been revised to show job losses of 500 people."

In June however, the unemployment rates in NSW, Queensland, the ACT and the Northern Territory rose. The best improvement came from Victoria, which had a drop from 5.1 pct in May to 4.6 pct in June. Tasmania currently has Australia's highest jobless rate at 5.5 pct, however did improve by 0.3 pct last month from 5.8 pct.

Mr Sebastian said that "Across the states the bulk of the job losses were recorded in NSW - consistent with the other key data releases this week showing weak retail spending and even weaker building approvals. It's also worth noting that if you add up the employment results for the individual states the job gains total a much more sedate 8,100 instead of 23,400. It seems the seasonal adjustment process is playing a part in the overall result."

Interestingly, in Australia if you work for a minimum of 1 hour per week, you are considered to be employed. Note that this also includes volunteer work.

In relation to interest rates, the Reserve Bank of Australia (RBA) has been given no additional ammunition to make a move on rates at this point. There will need to be a significant improvement in the Australian economy for the central bank to feel compelled to take action on rates. The RBA has kept rates unchanged at 4.75 pct for the eighth straight month and has only increased rates by 25 bps on one occasion in the past 12 months.

In Asia, China's central bank raised interest rates by 0.25 pct. The way rates work in China is a bit different to the Australian system. Australia's central bank has one interest rate to work with, but China has two. They have a one-year lending rate and a deposit rate which gives the Chinese more flexibility when it comes to moving rates.

Effectively, the Bank of China could increase deposit rates with the aim of its citizens saving more cash and maintain their current lending rate. This is the third time this year they have increased interest rates.

One of the world's largest technology businesses and the world's top maker of flat-panel televisions, Samsung Electronics (005930;ks) has announced a 26 pct profit downgrade for the June quarter mainly due to weakness in its LCD business. In South Korean trade, Samsung Electronics is down a little over 2 pct. Note that several markets in the Asian region identify their stocks by numbers rather than letters.

It was a good day for South Korea today, not just because its sharemarket rose but also after Pyeongchang won its bid to host the 2018 Winter Olympics. South Korea will be only the second Asian country after Japan to host the winter Olympics.

In Europe, The Bank of England and the European Central Bank (ECB) will be announcing their latest interest rate decisions this evening. Expectations are for British rates to remain unchanged for the twenty eighth consecutive month at 0.5 pct.

The market is expecting that the ECB will raise rates for the first time in 4 months from 1.25 pct to 1.5 pct tonight.

The Department of Labor will release its weekly unemployment claims report, which measures the number of Americans who filed for jobless insurance for the first time last week. Consensus is expecting the reading to drop to 421,000.

The Automatic Data Processing (ADP) will release June's employment change tonight. It is expected that around 67,000 new jobs were created over the month. This is a day ahead of the official government statistics which will be released by the Bureau of Labor Statistics late Friday night.

The volume of shares traded came in at 1.75 billion today, worth only $4.09 billion. 591 shares were up, 451 finished weaker and 364 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is down 0.13 pct or 6 pts to 4585.

Most major European markets trade between 5pm (AEST) and 1.30am (AEST). Futures in Europe are pointing to a slightly stronger start to trade.

Turning to currencies, the Australian dollar rose immediately following the ABS's employment report this morning and has improved by around 0.4 cent to US107.3 cents at market close. The Aussie has also hit a fresh all time high against the British pound and currently buys £0.67, JPY86.99 and EUR75.01 cents.

One of the best performing shares today was Acclaim Exploration (AEX), which rose 50 pct or 0.1 cent to 0.3 cents. AEX is a mineral exploration company based in Western Australia with a market capitalisation of $5.1 million.

Steven Daghlian
Commsec Market Analyst