Australian Stock Market Report –Afternoon 10/22/13

Commsec Afternoon Report.
(17:00 AEST)

Tuesday afternoon trade for the ASX200 was marked by new highs being made in successive hours. The exception being the final hour of trade, when sellers gained some traction following comments from the Federal Treasurer. Mr Hockey spoke of the outlook for the 2013-14 Federal Budget deteriorating. The impact was modest and not enduring. The Aussie dollar dipped and recovered not long after the comments, although it had been in a downtrend all day. December 10-year bond futures were trading at 95.925 (implying a yield of 4.075 per cent), compared to 95.955 (4.045 per cent) on Monday. December three-year bond futures contract closed at 96.880 (3.120 per cent), compared to 96.920 (3.080 per cent).

Resource stocks remained the mainstay in afternoon trade. The catalyst for the group's gains came in the shape of BHP's production report. The feature of the document was guidance for Western Australian iron ore increasing from 207mt to 212mt for FY14 after a strong quarter and the Jimblebar expansion coming into production earlier than expected. Petroleum also hit a new production at 62.7mmboe, with petroleum liquids at a three year high, due to strong production from US Shale liquids and Atlantis.
McMillan Shakespeare (MMS) shares finished higher by 4.5% following comments made at its AGM. The sentiment being that with legislative certainty restored post-election the negatives are all in the rear view mirror. MMS was at the epicentre of investor reaction to proposed FBT changes announced by the then Labour government.
Another group to host investors at its AGM was

Blackmores (BKL). The health products maker has seen profit fall by 31 per cent in the first quarter of the financial year due to falling sales in Australia. Local sales in the three months to September 30 were down seven per cent from the same period in 2012 in the face of ongoing margin pressure. BKL highlighted a marked slowdown in the health products sector. Retail customers as result are reducing their stock. A major driver has been the growth of discount chemists which is coming at the expense of small, community pharmacies. Additionally a lower Australian dollar has increased the cost of raw materials. Blackmores said it is taking a renewed focus on Australia to deal with the challenges, including appointing a new managing director for the region. Blackmores also operates in Asia, where sales rose by 19 per cent in the September quarter. Its profit in the September quarter was $5.4 million, down from $7.8 million in the same period in 2012. Profit also fell in the 2012/13 financial year - down 10 per cent to $25 million. Blackmores shares dropped 89 cents, or 3.4 per cent, to $25.11.

Direction for market tonight will be determined by the release of the delayed US September non-farm payrolls report (1.30pm BST). Expectations are centred on a stronger number (180k) than in August (152k). The majority of market participants now believe the Fed will delay tapering until 2014, but the details in the US non-farm payrolls report may alter that view.

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