Australian Stock Market Report – Afternoon 1/4/2013

MARKET CLOSE
(4.30pm AEST)

Some of the excitement surrounding the U.S budget legislation seemed to die off today. The Australian sharemarket lost a little ground today for the first time this year after a strong start to 2013. The All Ordinaries Index (XAO) slipped by just 0.4 per cent or 18.5 pts to 4742.9, however improved by over 1.2 per cent this week. Aussie shares are currently trading at 19-month highs, and Wednesday was the best start to a new year in over a decade.

Global markets ended mixed but mostly lower overnight. Germany's DAX dropped by 0.29 per cent, the DOW eased by 0.16 per cent, France's CAC40 lost 0.34 per cent while equities (shares) in both the U.K and Italy ended slightly higher.

The mining sector had a stellar start to the year, with the S&P/ASX 200 Materials index up 1.87 per cent this week. Today however, the industry was the biggest drag on trade, with BHP Billiton (BHP) down 0.63 per cent or 24 cents to $37.91 and Rio Tinto (RIO) slipping 1.01 per cent or 70 cents to $68.55. BHP has been once again unable to remain above $38 a share for more than a day or two.

The major banks helped minimise the losses, with ANZ Banking Group (ANZ) slightly outperforming the remaining big three. ANZ shares rose 0.32 per cent or 8 cents to $25.26, National Australia Bank (NAB) and Westpac (WBC) improved by 0.25 per cent while Commonwealth Bank (CBA) ended largely unchanged.

Automotive classified website, Carsales.com (CRZ) was one of the better stocks, after recording a 2.95 per cent or 23 cents to $8.03. It is trading around an all-time high.

The Federal Reserve surprised some in the latest minutes out last night from its December interest rate meeting. Many members of the Fed voiced their opinion that it would be a good idea to slow down stimulus before the end of 2013. Interest rates are still likely to be kept at or near 0 for the foreseeable future in North America however.

According to an ADP non-farm payrolls report (a report on the number of private sector jobs created or lost in the previous month), there were 60 per cent more jobs added in December than the market expected. Despite the positive reading, the number of Americans filing to receive unemployment benefits from the government for the first time last week rose more than forecast.

Shares in Japan traded for the first time in 2013 today after being closed for public holidays. Investors played catch-up following the fiscal cliff negotiations. The Nikkei 225 jumped by an impressive 2.5 per cent today; its best start to a new year since 2002 when the index rose by 3.12 per cent. The Nikkei started being calculated in 1950 and is one of the world's most quoted indices.

On the economic front today, a report has shown that over 95,000 new cars were sold in December, which is a record for the month. Over 1.1 million vehicles were sold over the past 12 months, which is a 10 per cent rise compared to 2011. Although some Australians might be doing it tough and remain conservative with their spending, new cars seem to be flying out the door. Car affordability is at its best level since 1976. CommSec estimates that someone on an average wage would have to work for around half a year to buy a new Ford Falcon XT auto sedan.

CommSec's Chieft Economist, Craig James said that "Car sales should remain firm in 2013. Unemployment is expected to remain low while continued strength in the Aussie dollar will hold down prices. Strong competition between global car manufacturers, underpinned by improving production efficiency should also ensure that car prices remain affordable for car buyers."

The top selling brand in 2012 was Toyota (by far), with over 218,000 vehicles sold. Holden holds second position, with 114,665 cars sold over the same period while Mazda sold 103,886 and sits in third place. The top selling car mode was the Mazda3.

Looking ahead, in Europe tonight German retail sales and a number of readings on the health of the region's services industry will be issued. In the U.S, the all-important non-farm payrolls will be issued. This is the most important monthly reading on the number of jobs either lost or created. The market is anticipating the creation of around 135,000 jobs in December. The unemployment rate is expected to stay around 7.7 per cent. Both of these employment numbers will be out at 12.30am (AEDT) while at 3am (AEDT), a report on crude oil inventories will be released.

Volume of shares traded came in at 1.19 billion today, worth just $2.66 billion. 384 shares were up, 499 were weaker and 371 ended unchanged.

At 4.30pm (AEDT) on the Sydney Futures Exchange, the ASX24 futures contract is up 0.06 per cent or 3 pts to 4708.

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 fall at the start of trade tonight in Europe.

U.S futures are also pointing to a slight drop on the open 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) lost some ground against some currencies throughout the day and is around US1c weaker against the greenback than the highs reached yesterday. One AUD buys US104.4 cents, is trading at £65 pence (stronger) and €80.00.

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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