Australian Stock Market Report - Afternoon 2/17/2012

MARKET CLOSE
(4.30pm AEDT)

Today marks the end of an eventful week for the Australian sharemarket. Shares rose on three occasions, had its worst daily performance in 2012 yesterday and there were 36,000 more jobs created in January than expected. The All Ordinaries Index (XAO) edged higher by 0.4 pct or 16.1 pts to 4273.3.

The miners pulled back while all other sectors improved. RIO Tinto (RIO) lost 1.06 pct or 71 cents to $66.57 while the larger BHP Billiton (BHP) eased by 0.28 pct or 10 cents to $35.20. Iron ore miner, Fortescue Metals (FMG) fell 0.38 pct or 2 cents to $5.29.

The big four banks were mixed, with ANZ Banking Group (ANZ) improving by 1.65 pct or 35 cents to $21.55 after posting better than expected profit numbers. National Australia Bank (NAB) rose 0.4 pct or 9 cents to $22.72. Both Commonwealth Bank (CBA) and Westpac (WBC) fell 0.35 pct.

Santos (STO), the oil and gas producer and surfwear retailer, Billabong (BBG) posted their latest profit results.

Santos (STO), Australia´s largest domestic gas producer, has recorded a 20% rise in underlying profit in 2011 (Jan to Dec) to $453 million. The result was driven by higher revenue, thanks to a 32% rise in oil prices and a 9% jump in the price of gas. Production was slightly lower than in 2010 due to flooding in Cooper Basin and cyclones offshore Western Australia.

It declared a final dividend payment of $0.15 a share, which will be paid to eligible shareholders on March 30. This will cost the company around $142 million and takes the full year (interim + final dividend) payout to $0.30. STO expects production for 2012 of 51-55 mmboe (Million Barrels of Oil Equivalent). This is an 8% - 16% boost in production compared to 2011. It will be driven by a number of new projects in the Asia Pacific region. STO shares rose by 0.07 pct or 1 cent to $13.56, taking the gains for the year so far (since the start of January 2012) to 10.8 pct.

Surfwear retailer, Billabong (BBG) was one of the day's standouts after rising 46.37 pct or 83 cents to $2.62. Its half-year profit results today did not surprise the market, however the announced restructure of its business certainly did. BBG is expected to cut as many as 400 jobs globally and could close between 100 and 150 stores. The company has around 6,000 staff worldwide. BBG has also rejected a large takeover offer from a U.S firm which was pricing the company at a significant premium to its current share price (based on last week's price).

On the reporting front next week, a number of big names will be releasing either their half or full year profit results. This includes David Jones, Flight Centre and Virgin Australia.

There was no major economic data released in Australia today. Looking ahead, next week is also looking relatively quiet. On Tuesday, the Reserve Bank board minutes from its last interest rate meeting will be issued along with a speech by the Reserve Bank Governor at the ASIC Summer School. On Wednesday, the latest Wage Price Index will be released for the December quarter. This measures the growth or contraction of wages across the country. The latter part of the week will also include a number of speeches by Reserve Bank officials.

There was no major economic data released in the region today, however China has agreed to buy 8.6 million metric tons of soybeans from U.S suppliers worth US$4.3 billion. Iowa is North America's biggest producer of both soybeans and corn.

In Europe last night, markets steadily improved from a significantly weaker start to end largely unchanged. This was following news that the Greek government had potentially come to an agreement with international lenders on how to significantly reduce the size of its budget. The Greek government owes around €14 billion to lenders by March 20.

Tonight, the latest retail sales report will be issued in the U.K at around 8.30pm (AEDT). The market is expecting consumers to have become a little more cautious with their dollars over the previous month.

In the U.S last night, the number of Americans filing to receive unemployment benefits for the first time in the previous week hit a close to four-year low. Data on the U.S housing market was not quite so positive however. There was a 3 pct rise in the number of foreclosures in January and 210,941 properties filed. Microsoft was trading at its highest level in nearly two years overnight and is up around 20 pct this year.

Tonight, the latest inflation (Consumer Price Index) will be released and will be monitored closely by the Federal Reserve. Inflation (or the change in prices) is still not expected to be a concern for the U.S central bank. The U.S markets will be closed on Monday due to a public holiday (President's Day).

The volume of shares traded came in at 1.87 billion today, worth $4.13 billion. 565 shares were up, 422 finished weaker and 389 ended unchanged.

At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is up 0.6 pct or 25 pts to 4166.

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 lower; indicating that U.S stocks could open in the red 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 US107.7 cents. This is a full cent higher than at this time yesterday. The AUD is currently trading at £68.1 pence and €82.08 cents.

Steven Daghlian, CommSec Market Analyst

[Kick off your trading day with our newsletter]