Australian Stock Market Report –Afternoon 2/19/2013

MARKET CLOSE
(4.30pm AEDT)

The Australian sharemarket has improved for the 15th time in 20 trading sessions, with the All Ordinaries Index (XAO) up 0.4 per cent or 18.1 pts to 5101.00. Local shares are now hovering around their best levels since August 2008. Global markets were quiet overnight due to the U.S President's Day public holiday which kept American markets closed.

Almost all sectors rose today, with the exception of the consumer staples and I.T sectors.

The earnings season continues, with some big names announcing their latest profit results today. Beverage company, Coco-Cola Amatil (CCL) rose by 1.98 per cent or 27 cents to $13.90 despite reporting a 22 per cent fall in Full Year profit to $459.9 million. CCL is the company behind Powerade, Mount Franklin water and Coca Cola. This was partly due to $98 million worth of write-downs and significant items. CCL still announced a 6 per cent rise in sales to $5.1 billion and a final dividend of $0.32 per share which will be paid out to eligible shareholders. CCL shares are up 3.35 per cent this year, adding to 2012's 16.85 per cent improvement.

InvoCare (IVC), the largest private funeral & cemetery operator in Asia Pacific has reported a 64.8% rise in Full Year (Jan-Dec 2012) profit to $44.5M. The year was one of consolidation, with the June 2011 purchase of Bledisloe being fully integrated. Bledisloe is Australia's 2nd largest operator in the industry & New Zealand's market leader. This acquisition added another 47 locations in Australia and NZ; contributing $2.9M or 6.9% of total profit to IVC's bottom line. IVC also completed the purchase of Tuckers & Resthaven. IVC services around 50,000 families in Australia, NZ & Singapore each year. IVC declared a 19cps dividend, scheduled to be paid on 5 April. Its stock continues to outperform; up 13.5% since the start of Jan 2013, and is higher for the 5th straight year. Since listing in 2004, IVC shares have returned 18.5% per year on average, while the broader market is up less than 7% due to the impact of the Global Financial Crisis in 2008. Looking ahead, IVC plans on opening new funeral homes across NSW, QLD, SA & New Zealand.

Tomorrow will be another busy session on the profit reporting front, with BHP Billiton (BHP), Seven West Media, Woodside Petroleum, Fortescue Metals (FMG), Suncorp (SUN) and Toll Holdings all scheduled to release their numbers.

The miners improved modestly, with gains from Fortescue Metals (FMG) and BHP helping to keep the market positive. In fact, BHP rose by 0.85 per cent or 33 cents to $39.00, its highest close August 2011.

The major banks all ended higher, with Commonwealth Bank (CBA) rising by 0.41 per cent or 27 cents to $66.05, Westpac (WBC) edged higher by 0.33 per cent or 10 cents to $30.30, while ANZ Banking Group (ANZ) and National Australia Bank (NAB) rose by around 0.1 per cent.

Australia's largest telco and the sixth biggest company on the local market, Telstra (TLS) rose by 1.31 per cent or 6 cents to $4.63.

On the economic front today, the Reserve Bank board minutes were issued from the Feb 5 meeting. The minutes have essentially highlighted the fact the RBA seems comfortable to keep rates on hold for the time being. The market is only factoring in a 25 per cent chance of a rate cut in March.

CommSec Economist, Savanth Sebastian said that "...it was hardly a surprise that there wasn't anything significantly new in the minutes of the last Reserve Bank Board meeting. Especially considering that with the decision to keep interest rates on hold in early February we had the accompanying statement, and since then we have had the release of the Statement on Monetary Policy and also a speech by Reserve Bank Assistant Governor Kent in the last two weeks. If anything the minutes tend to confirm the view portrayed just over a week ago, when the Reserve Bank released its latest growth and inflation forecasts."

He went on to say that "In fact the urgency to cut interest rates in coming months has lessened, despite the modest downgrades to medium term growth forecasts fleshed out in the Monetary Policy Statement. Interest rate sensitive parts of the economy had shown signs of responding to the rate cuts, resource exports had recorded a strong boost, commodity prices have also lifted, while the pickup in share markets, lift in house prices and a modest improvement in confidence should provide policymakers with a degree of comfort."

The major Asian markets are now trading normally again after interrupted trade last week due to the Lunar New Year celebrations. Japan's Nikkei rose by 2.09 per cent today, while shares in China and Hong Kong eased by around 0.3 per cent.

Looking ahead, the latest ZEW Economic Sentiment reading will be issued in Germany at 9pm (AEDT). These are the results of a survey of around 275 German institutional investors and analysts which asks respondents to rate the relative 6-month economic outlook for Germany. This is considered an important reading due to the standing of Germany in the Eurozone.

American markets will be trading for the first time this week tonight following yesterday's President's Day public holiday. The National Association of Home Builders will issue its activity index for February tonight. This is based on a survey of around 900 home builders, asking questions relating to the future outlook for home sales.

Volume of shares traded came in at 2.01 billion today, worth just $6.35 billion. 480 shares were up, 531 were weaker and 360 ended unchanged.

At 4.30pm (AEDT) on the Sydney Futures Exchange, the ASX24 futures contract is down 0.14 per cent or 7 pts to 5053.

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 a slight rise at the start of trade tonight in Europe.

U.S futures are also pointing to a modest rise 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) gained some ground against the greenback throughout the day and buys US103.3 cents, is trading at £66.7 pence and €77.3 cents.

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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