Australian Stock Market Report – Afternoon 11/15/2012

MARKET CLOSE
(4.30pm AEDT)

The Australian sharemarket lost ground for the third time in four days, with the All Ordinaries Index (XAO) falling by 0.9 per cent or 40.1 pts to 4370.6. So far, this has been the worst performance by the local market in half a year while shares are also trading at around two-month lows.

One of the major concerns for the market continues to be the fiscal cliff. American politicians are running out of time to agree on budget deficit solutions before automatic spending cuts and tax increases are triggered at the start of next year. This has been keeping investors on edge and is one of the reasons why the DOW slipped by 1.5 per cent overnight, Germany's DAX fell 0.9 per cent while the French and Italian markets also lost ground.

All sectors finished the day in the red today, with none suffering more than our miners. BHP Billiton (BHP) slumped by 1.81 per cent or 61 cents to $33.12 while Rio Tinto (RIO) fell 1.78 per cent or $1.03 to $56.82. Gold producer, Newcrest Mining (NCM) slumped by 4.48 per cent or $1.14 to $24.31.

One of the best performers of the day was department store owner, Myer (MYR) which rose by 6.5 per cent or 13 cents to $2.13 making it the retailer's best daily improvement of the year. MYR shares are up 10.08 per cent this calendar year. The gains came after announcing a 1 per cent rise in sales to $688 million for the previous quarter. Its competitor, David Jones (DJS) jumped 2.03 per cent or 5 cents to $2.51 while discount retailer JB Hi-Fi (JBH) rose by 2.75 per cent or 28 cents to $10.46.

There was a plethora of Annual General Meetings (AGMs) today, with Bluescope Steel (BSL), Lend Lease, Mirvac, Village Roadshow and Clean Seas Tuna all scheduled to meeting with shareholders. BSL said it still expects to make a loss over the first half of the financial year; however seems pleased with progress made on its joint venture with Japan's Nippon Steel (one of the world's biggest steel companies). BSL expects to receive proceeds from the venture over the first quarter of 2013. BSL shares ended flat at 46 cents.

Property group, Lend Lease (LLC) eased by just 0.12 per cent or 1 cent to $8.25. LLC said that sales are remaining subdued despite a lower cash rate (1.25 per cent lower than November 2011).

On the economic front, a report has showed that the number of cars sold in October slipped by 2.8 per cent after rising a substantial 4.6 per cent in September. Without a doubt however, 4WDs are remaining as popular as ever; accounting for one in three passenger vehicle sales in Australia.

CommSec Economist, Savanth Sebastian said that "Despite the modest fall in seasonally adjusted terms, the car sales figures in recent months have been relatively encouraging. In fact in seasonally adjusted terms car sales hit a record high in September. Clearly the improvement in car affordability is the clear driver. Car affordability is at the best levels since the 1970s, and coupled with the recent rate cuts it seems to have prompted consumers to update their rides. Interestingly the strength in vehicle sales is due to strong growth in sales of sports utility vehicles or 4WDs. Sales of 4WDs rose by almost 23 per cent in October compared with a year ago. It is clear that Australians have a love affair with 4WD vehicles with one in every three passenger vehicles sold in Australia a sports utility vehicle. Looking forward the outlook for the car industry certainly looks healthy. The recent pickup in consumer confidence is encouraging and provided it is sustained, it will lead to further big ticket purchases over coming months."

In Europe tonight, the main piece of news out will be the quarterly growth reading which is due at 9pm (AEDT). The Eurozone economy is likely to have contracted modestly over the period. Inflation data will also be issued at 9pm (AEDT) and should continue to remain subdued.

It will be a busy session in the U.S, with a plethora of data expected over the next 12 hours. Consumer prices (inflation) is due for the month of October, weekly jobless claims, a manufacturing report and a speech by the Fed Reserve Chairman Ben Bernanke are all scheduled tonight.

Volume of shares traded came in at 1.7 billion today, worth just $4.75 billion. 267 shares were up, 664 were weaker and 359 ended unchanged.

At 4.30pm (AEDT) on the Sydney Futures Exchange, the ASX24 futures contract is up 0.14 per cent or 6 pts to 4357.

Due to the end of daylight savings in Europe, most major European markets are now trading between 7pm (AEDT) and 3.30am (AEDT). Futures are currently pointing to a weaker start to trade tonight.

U.S futures are pointing to a better start tonight. Due to the start of daylight savings in Australia and its end in the U.S, American markets will now be trading between 1.30am (AEDT) and 8am (AEDT).

Turning to currencies, the Australian dollar (AUD) has slumped overnight due in part to concerns offshore. One AUD buys US103.5 cents, is trading at £65.3 pence and €81.2 cents.

Australia is a commodity based economy, with commodities in general accounting for almost 80 pct of all our exports over the past nine months. In essence, when the going gets tough globally, there is fear of less demand for our commodities, which tends to result in a weaker AUD.

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