Australian Stock Market Report – Afternoon 2/11/2013

Afternoon Market Report
(17:00 AEDT)

Several factors came converged on Monday to ensure a quiet start to the trading week. The trading week on Wall St closed with small gains and weather related issues ensured that volumes remained low. The regional experience was marked by lunar new celebrations which will see most centres closed for the early part of the week whilst the Chinese market will be offline for the entire week.

Volumes on the ASX were at a trickle as investors anticipated a hectic schedule of company reporting over coming days. The ASX200 eased by 0.24% to 4,959, while the broader All Ordinaries index fell 0.18% to 4,980. There were 1.4 billion transactions valued at $3.7 billion. 477 shares ended with a gain, 483 lost ground whilst 380 were unchanged.

The consumer discretionary sector stood out as the best improved group on Monday. Retail stocks remained well bid after outperforming the market last week. JB Hifi was the catalyst for today's buying after the retailer outstripped the markets expectations with its result. The Low-cost retailer of electronic and home entertainment products was established in 1974 and operates 176 stores in Australia and New Zealand. A reported net profit of $82 million in the six months to the end of December was up from $79.6 million during the previous corresponding period. JBH opened 11 new stores in the period which helped grow sales by 2.3 per cent. Although on comparable sales basis, sales were down 3.5 per cent on the first half of 2011/12. JB Hi-Fi expects its full year net profit to be in the range of $108 million to $112 million, up from the previous year $104.6 million. JB Hifi shares ended at $12.89 up $1.88 or just over 17%. Elsewhere in the sector Myer closed at $2.67 up 8 cents or 3.08%, Harvey Norman enjoyed a solid gain finishing at $2.33 a gain of 13 cents or 5.9%, David Jones closed at $2.70 a gain of 7 cents or 2.6%.

Shares in Hills Industries were sold heavily after reporting a net loss of $73.6 million for the six months to the end of December 2012, against a net profit of $15 million in the prior corresponding period. The result included $81.8 million in costs related to impairments, restructuring and closures. The shares ended trade at $96 a loss of 14 cents or 12.7%.

Professional services group Coffey International shares rose to 38.5 cents a gain of 5.48%
On hopes of a turnaround after reporting a 20 per cent fall in net profit to $3.7 million in the six months to the end of December 2012.

Financials as a group ended lower by 0.28%. Housing finance figures for December were weaker than expected. Home lending remains soft, despite the benefit of rate cuts. This result adds weight to the case made in certain quarters that the RBA might need to cut rates again and that the rebound in rates will not be as rapid as in past periods. The number of new owner-occupier housing loans fell by 1.5 per cent in December after falls of 0.7 per cent in November and 0.1 per cent in October. Excluding the refinancing of dwellings, loans were down 0.1 per cent in December. The figures revealed that first home buyers were less active in the month accounting for just 14.9 per cent of all loans in December - the weakest reading in 8½ years. Fixed rate loans accounted for 13.6 per cent of all loans in December, down from an eight-month high of 14.3 per cent in November. And the average home loan across Australia stood at $308,300, up 3.1 per cent on a year ago. ANZ shares closed at $27.77 down 35 cents or 1.24%, CBA ended at $65.12 a gain of 29 cents or 0.45%, NAB settled at $29.09 up 7 cents or 0.24%, Westpac ended trade at $27.96 a loss of 12 cents or 0.43%. Investment bank Macquarie Group closed at $38.00 up 22 cents or 0.58%. Amongst the regional lenders Bank of Queensland closed at $8.71 up 11cents or 1.28%, whilst Bendigo Bank ended the day at $9.59 a gain of 4 cents or 0.42%.

Looking ahead to the European markets, lingering concerns about the upcoming Italian election (24-25 February) remain an important pressure point. Data released this week includes Eurozone December industrial production on Tuesday and Q4 2012 Eurozone GDP on Thursday. The risk to these readings is that they underperform the markets expectations. Consensus expectations are for the Eurozone economy to have contracted by 0.4% (QoQ) in Q4 2012. Such an outcome would be the largest quarterly contraction since the Eurozone crisis erupted. There are no major data releases anticipated in the US tonight.

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