Australian Stock Market Report - Afternoon 2/22/2012

MARKET CLOSE
(4.30pm AEDT)

The Australian sharemarket rose slightly today for the fourth consecutive day. Four straight sessions of gains is something the market has not accomplished since the end of November last year. The All Ordinaries Index (XAO) edged higher by 0.1 pct or 3.9 pts to 4372.1.

Part of the reason for the gains is the latest HSBC Flash Manufacturing Index which was released at 1.30pm (AEDT) and showed a slight improvement in China's manufacturing industry.

Most sectors improved at least modestly today, with the energy sector the standout after improving by around 1.7 pct. Australia's second largest oil and gas producer, Woodside Petroleum (WPL) gained 2.53 pct or 91 cents to $36.86 despite posting a relatively unimpressive full year profit result of US$1.5 billion. This was a 4.3 pct drop in earnings compared to 2010. Revenue rose strongly by 14.5 pct to $4.8 billion and the dividend improved by 4.7 pct to $1.10 for the full year.

One of the reasons for WPL's share price strength today was the fact the oil and gas producer re-affirmed production guidance for 2012. Expectations are for a significant increase in volume compared to the previous year.

Transfield Services (TSE) issued a $43.6 million profit in 1H12 (July to December 2011). This was largely in-line with market expectations. TSE provides services to a number of industries, including the mining and transport sectors. The Sydney based business said that earnings and margin growth were driven by improved results from its core Australian and New Zealand operations, which accounted for 75% of its total revenue.
The company was created around 55 years ago by two Italian born engineers.

It reiterated that it expects profit to be between $130 million and $135 million for the full year. TSE will be paying out a $0.05 a share dividend to eligible shareholders on April 24, which is in-line with market forecasts. TSE shares are up 12.3% (not including today´s price movements) this calendar year and have greatly outperformed the broader market. TSE fell 0.83 pct or 2 cents to $2.40.

Australian based biopharmaceutical company, CSL Limited (CSL) reported a 3.4% drop in 1H12 (July to December 2011) profit to $483 million. The result was a little lower than market expectations however the blood products and vaccine maker delivered an increase in revenue, a higher dividend and upgraded its profit expectations by 3% for 2012. Sales in the U.S accounted for 42% of global revenue, Europe made up 32%, while Australia contributed 10% to total sales.

CSL will now start announcing its profit results in U.S dollars. The company creates products used to treat patients with bleeding disorders, infections and other diseases. It is the world´s second largest plasma manufacturer. A $0.36 a share dividend will be paid to eligible shareholders on April 13. CSL shares are down 3.2% this calendar year (not including today´s price movement) and have underperformed the broader market. CSL shares rose 2.49 pct or 77 cents to $31.72.

The four major banks improved today, with ANZ Banking Group (ANZ) up 0.64 pct or 14 cents to $22.14, Westpac (WBC) rose by 0.53 pct or 11 cents to $20.77, Commonwealth Bank of Australia (CBA) gained 0.34 pct or 17 cents to $49.64 and National Australia Bank (NAB) edged higher by 0.21 pct or 5 cents to $23.45.

Out of Europe last night, markets lost a little ground despite Greece receiving a €130 billion bailout package to ease its financial stress for the mean time. Greece is in its fifth year of a recession, Note that Germany's DAX index has improved by over 17 pct this year while France's CAC40 is up by close to 10 pct.

Tonight, France and Germany will both be releasing their latest manufacturing readings while the minutes from the British central bank's latest board meeting will also be out.

In the U.S tonight, a report on the number of existing homes sold last month will be released. The market is expecting a slight rise in home sales.

The volume of shares traded came in at 2.01 billion today, worth $4.93 billion. 513 shares were up, 479 were weaker and 367 ended unchanged.

At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is up 0.12 pct or 5 pts to 4278.

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 higher; indicating that U.S stocks could open in the black 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 US106.7 cents and is weaker than this time yesterday. The AUD is currently trading at £67.5 pence and €80.6 cents.

Steven Daghlian, CommSec Market Analyst

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