Australian Stock Market Report - Afternoon 2/13/2012

MARKET CLOSE
(4.30pm AEDT)

The Australian sharemarket has kicked off the new trading week higher, with the All Ordinaries Index (XAO) up 0.9 pct or 36.8 pts to 4359.4. Futures were initially pointing to a slightly lower start to trade, however turned positive once the Greek parliament passed new austerity measures despite a number of violent protests in seven Greek cities.

The mining sector was a little lower on the open following weaker commodity prices on Friday. Iron ore producer, Fortescue Metals (FMG) rose by 4.96 pct or 26 cents to $5.50 following M&A (Merger and Acquisition) speculation. The larger BHP Billiton (BHP) gained 0.99 pct or 36 cents to $36.66 while RIO Tinto (RIO) edged higher by 0.64 pct or 45 cents to $70.43.

The financials, which make up more than 40 pct of the Australian market rose by close to 1 pct today. ANZ Banking Group (ANZ) jumped 1.63 pct or 35 cents to $21.77, Westpac (WBC) gained 1.44 pct or 30 cents to $21.15, National Australia Bank (NAB) improved 1.39 pct or 32 cents to $23.26 and Commonwealth Bank of Australia (CBA) rose by 0.82 pct or 41 cents to $50.29.

Week two of the Australian corporate earnings season has kicked off with discount retailer, JB Hi-Fi (JBH), Singapore Telecom (SGT) and construction company, Leighton Holdings (LEI) issuing either their half year or full year profit reports this morning.

JBH reported a 9.4 pct fall in its first half profit (July to December 2011) to $79.6 million. This was still a little better than what the market was expecting and JBH shares rose 0.33 pct or 4 cents to $12.03. It declared a slight increase in its next dividend payment to eligible shareholders from $0.48 to $0.49.

One of Australia's largest construction companies, LEI issued a half year profit (July to December 2011) of $340 million which was largely in-line with market forecasts. This was a 57 pct rise in profit. Its revenue was better than expected and it announced a dividend of $0.60 a share which was unchanged. LEI shares fell 1.97 pct or 47 cents to $23.38.

A number of big names will be delivering their profit results over the week, with Thursday poised to be the busiest day of the season to date. Tomorrow, uranium miner Paladin Energy (PDN) will issue its numbers. On Wednesday, iron ore miner Fortescue Metals (FMG) will release its numbers. On Thursday, AMP, ASX, Brambles, Qantas Airways, QR National, Westfield Group and Wesfarmers will all be delivering their earnings reports. Both surfwear retailer Billabong and oil and gas company Santos are scheduled to issue their reports on Friday.

On the economic front today, December's housing finance report was out in addition to the latest credit and debit card lending statistics for December which showed that consumers still are not interested in increasing their spending using credit cards.

The number of new owner-occupied home loans jumped by a better than expected 2.3 pct in December. Commsec Economist, Savanth Sebastian said that "Property prices might be still falling but there are signs that the housing sector is starting to turn the corner. The latest housing finance data certainly provides a degree of encouragement. Home loans have now increased for nine consecutive months and as we have been saying for some time now it does seem like it will be investor finance that does the bulk of the heavy lifting in getting the housing sector back on its feet. In fact investment loans surged by 7.5 per cent in December after a 2.7 per cent rise in November."

Petrol prices fell by 2.7c to 142.4 cents a litre in the previous week. Unfortunately, due to higher wholesale prices, petrol prices at the pump are likely to rise over the next fortnight.

Tomorrow, National Bank's business survey will be out for January and will show us just how confident Australian businesses currently are. On Wednesday, February's consumer sentiment report, lending finance and new motor vehicle sales report will be out. On Thursday, we will find out how many jobs were created or lost in January. The market is forecasting the creation of 15,000 jobs over the month and for the unemployment rate to rise from 5.2 pct to 5.3 pct.

In Asia today, there were signs that the Japanese economy is slowing at a faster than expected pace. Japan's economy shrunk by 1.6 pct YoY (Year on Year). YoY means the previous quarter (October to December 2011), compared to the corresponding period in the previous year (October to December 2010). A strong yen and flood damage in Thailand has impacted the world's third largest economy's growth.

Tomorrow, Japan's central bank will be meeting to discuss monetary policy and make a decision on interest rates. No major changes are expected to be announced. The Bank of Japan (its central bank) is also going to hold a press conference.

On Wednesday, New Zealand will release its latest retail sales report for the previous quarter (October to December 2011). The market is expected a 1.1 pct improvement in sales. No other major data will be released over the week in the region.

In Europe this morning, the Greek parliament passed further austerity measures including a more than 20 pct cut in the minimum wage and significant government job cuts. This has paved the way for an additional €130 billion bailout package to help pay down Greek debt. The European Finance Ministers are meeting this Wednesday in Brussels and could approve the next package then. Although this seems like a victory for the other 16 Eurozone nations, it is tough for the everyday Greek citizen who is seeing certain benefits they have enjoyed for years slowly disappear. The Greek elections will be held this April.

No major economic data or meetings are scheduled in Europe tonight; however Governments in Italy, Germany and France are all raising funds via the bond market.

France, Germany and Italy are all issuing their latest quarterly GDP (Gross Domestic Product) reports from 5.30pm (AEDT) to around 9pm (AEDT) on Wednesday. The broader Eurozone's latest GDP reading will also be out that same night in addition to Europe's latest trade balance (the difference between imports and exports in December).

No major market moving economic data is scheduled for release in the U.S tonight. Tomorrow night, North America's latest retail sales report will be issued for the month of January. The market is expecting a 0.6 pct lift in sales. On Wednesday night, the Federal Reserve's latest board minutes will be released for the January 25 meeting. On Thursday night, reports on the state of the U.S construction sector will be released. On Friday, the January inflation reading will be announced.

The volume of shares traded came in at 1.93 billion today, worth $3.83 billion. 510 shares were up, 464 finished weaker and 397 ended unchanged.

At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is down 0.05 pct or 2 pts to 4243.

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

Dow Futures are currently slightly higher; indicating that U.S stocks could open a touch stronger tonight. American markets open at 1.30am (AEDT). Due to the Americans going back an hour on November 5 last year, U.S markets will be trading between 1.30am (AEDT) and 8am (AEDT).

Turning to currencies, the Australian dollar (AUD) buys US107.3 cents and €81 cents. The AUD is currently trading at £68 pence.

Steven Daghlian, CommSec Market Analyst

[Kick off your trading day with our newsletter]