Australian Stock Market Report – Afternoon 11/21/13

EVENING REPORT
(5pm AEDT)

The Australian sharemarket fell once again, with the All Ordinaries Index (XAO) ending 0.4 per cent lower by the close. This makes it the longest losing streak for local stocks in five months. Minutes from the last Federal Reserve meeting were issued overnight and showed that the US central bank hasn't ruled out the possibility of a reduction in stimulus in the 'coming months'. This together with a weaker than expected reading on the health of China's manufacturing sector this afternoon held the Australian dollar and sharemarket back.

There continued to be a number of Annual General Meetings (AGMs) held by some of Australia's biggest businesses - BHP Billiton (BHP), pathology business Sonic Healthcare (SHL) and Paladin Energy (PDN) included.

Australia's biggest miner, BHP Billiton (BHP) finished unchanged today and is only up by a modest 1.25 per cent since January. BHP Chairman, Jac Nasser said that China's economic growth is likely to be strong enough to drive demand for commodities for the next 15 years. Over 7 per cent growth is expected over 2014. 30 per cent of BHP's revenue is generated through sales to China. The mining giant recorded a 30 per cent drop in profit last financial year to US$10.9 billion.

Uranium miner, Paladin Energy (PDN) rose by 1.3 per cent; however is still down in the order of 60 per cent this calendar year. Last week PDN delivered a US$40 million loss in the three months to September. Despite continued efforts to reduce production costs, defer exploration projects and cut staff, PDN hasn't been able to recover since Japan's nuclear meltdown back in 2011. PDN shares have slumped by 93 per cent from the highs hit in 2011.

China's HSBC Manufacturing PMI (a measure of the manufacturing industry's activity) fell from 50.9 to 50.4. Any number above 50.0 indicates expansion; however the bottom line is that China isn't doing as well on the manufacturing front as some had expected. Both the Australian dollar and stock markets eased in the afternoon.

The Bank of Japan confirmed it will continue to stimulate its economy (printing money until inflation reaches 2 per cent)

The Aussie dollar slipped and now buys US92.9 cents, partly impacted by China's PMI and Fed minutes.

Looking ahead, manufacturing readings out of both Europe and the US will be highlights overnight.

Tomorrow, David Jones, Gindalbie, AV Jennings, Jetset Travelworld, Capilano Honey and a handful of other companies will be holding Annual General Meetings (AGMs) with investors.

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