Australian Stock Market Report – Afternoon 2/25/14

EVENING REPORT
(4.30pm AEDT)

Despite hitting fresh five and a half year highs earlier today, the Australian sharemarket has fallen for the first time since 13th February this afternoon. The All Ordinaries Index (XAO) lost 0.2 per cent; however is still up by 4.5 per cent so far in February. This makes it the best month for local stocks since July 2013.

The mining sector was the biggest drag on trade as profit takers stepped in, making it the worst day in a month for the industry. Despite the weakness today, the miners have surged by close to 7 per cent since the start of February.

The profit reporting season is winding down; however we still heard from the likes of QBE Insurance (QBE), Ramsay Health Care (RHC), Cabcharge (CAB) and Graincorp (GNC) today.

Australia's largest private hospital operator Ramsay Health Care (RHC) posted a slightly better than forecast $171.6m half year underlying profit. The result was driven by increased demand for its healthcare facilities, continued capacity expansions and acquisitions. Operations in Australia, Malaysia and Indonesia accounted for $161.1m or 93 per cent of RHC's earnings. RHC bought 30 psychiatric facilities in France and three hospitals in Malaysia over the half. Looking ahead, RHC upgraded its guidance for the year by 4 per cent; now expecting 16-18 per cent growth for FY14. This pushed RHC shares up by 6.69 per cent following the guidance upgrade. A fully franked $0.34 per share interim dividend was declared, payable to eligible investors on 26th March.

Australia's largest general insurer, QBE Insurance (QBE) rose by 5.4 per cent despite posting a $254m loss over 2013. In December last year, QBE warned the market of the loss, which was largely driven by underperformance in its U.S. division. QBE shares slumped by 26 per cent in December following the update.

Agri-business, Graincorp (GNC) eased by 0.5 per cent after warning the market to expect an $80-$100m full year profit ($75m less than the previous year) at its Annual General Meeting. GNC chairman Don Taylor said tough conditions in NSW and QLD are partly to blame.

Taxi payment business Cabcharge Australia (CAB) rose by 5.96 per cent after posting a $36m half year profit, thanks to its 'tap-and-go' card technology and healthier economic conditions. A fully franked $0.15 per share dividend was announced, payable to eligible investors on the 30th April.

There was no major market moving economic news in Australia or the region today. The CommSec Luxury Vehicle index was issued however. The index rose by 16 per cent in the 12 months to January. This was partly driven by car affordability being at its best level since the mid-1970s. CommSec's economist Savanth Sebastian said that "Luxury vehicle sales are a useful leading indicator for the broader economy as well as highlighting the growing wealth levels of ordinary Australians. Home prices have been rising, and similarly the number of luxury vehicle sales has lifted to record highs over the past few months. No doubt the improvement in business and consumer confidence has lifted sharemarkets and home prices, making consumers more optimistic about big ticket purchases."

At the close, 2.04bn shares changed hands, worth $5.2bn. 491 stocks are higher, 492 are in the red and 369 are unchanged. Volume has picked up since the start of February.

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