Australian Stock Market Report - Afternoon 12/19/2011

AFTERNOON REPORT (4.30pm AEDT)

Local stocks were hammered today, as investor sentiment was dampened by more concerns about the Eurozone and as the death of North Korean dictator Kim Jong Il added to global uncertainty. The All Ordinaries Index (XAO) fell 105pts or 2.5pct to 4113.9.

Over the weekend, ratings agency Fitch kept France's credit rating on negative outlook and warned it may cut the credit ratings of six other Eurozone nations. Financial stocks were in focus, with the local sector losing 2pct. Shares in Bendigo and Adelaide Bank (BEN) fell 6.7pct to $8.40 on a ratings downgrade and despite the lender announcing it was increasing its capital raising venture to $150 million due to strong demand from institutional investors.

However it was the retailers which bore the brunt of the selling, after surfwear retailer Billabong (BBG) became the latest casualty of a slowdown in consumer spending. BBG has cut its 1H profit forecast due to lacklustre Christmas sales. The announcement saw BBG shares slump 44.2pct to $2.03. Entertainment products retailer JB Hi-Fi (JBH) fell 7.2pct to $11.80 after issuing a similar warning last week. Among the other retail stocks, shares in Harvey Norman (HVN) fell 8.7pct to $1.785 and Myer Limited (MYR) was off 6.2pct to $2.12 while David Jones (DJS) slumped 9.1pct to $2.50.

Elsewhere today, Qantas (QAN) came to an agreement with one of three unions it´s been battling with. The Aircraft Engineers´ Union says it will now allow Qantas to build the new A380 aircraft offshore, in exchange for an undertaking that existing jobs are safe. Workers will also receive a three percent payrise. QAN shares slumped 3pct to $1.475 while Virgin Australia (VAH) was down 7.7pct to $0.30.

In the energy space, Woodside Petroleum (WPL) announced plans to apply to delay a decision on its controversial and expensive liquefied natural gas project in Western Australia's Browse Basin by up to six months. The community has been divided and some have had an ongoing battle with Woodside over its plans to build the $30 billion project. WPL shares edged lower by 3.4pct to $30.24.

Economic data released today showed petrol prices have eased slightly. According to the Australian Institute of Petroleum, the national average petrol price fell by 1.0 cents to 140.7 cents a litre last week. The wholesale price averaged 129.6 cents a litre, largely unchanged on the previous week.

Australia's population grew by 74,233 people over the June quarter to 22,620,554. Annual population growth rose from a 5½ year low of 1.40 per cent to 1.44 per cent. A total of 170,300 people migrated to Australia over the year to June 2011 up from 4½ year low of 167,100 people in the year to March 2011.

There were 296,800 babies born in the year to June, holding just shy of the highest reading since quarterly records began 28 years ago (297,100 in the year to March 2009). Population growth is crawling off 11-year lows in Queensland, 8-year lows in Northern Territory, 6-year lows in South Australia, 5-year lows in Victoria, and NSW and 4-year lows in Tasmania.

The Australian dollar ended the day's trade at US99.24c, £00.6404 and €76.3c.

On the market overall, a total of 2.1 billion shares were traded, worth $4.3 billion. 149 were up, 1033 were down and 261 were unchanged.

At 4.30pm AEDT on the ASX24, the futures contract was at 4046, down 70pts.

Ahead tonight, the NAHB housing index is released in the US.

Juliette Saly, CommSec Analyst

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