Australian Stock Market Report – Afternoon 2/25/2013

Afternoon Market Report

The Australian share market ended higher on Monday although it wasn't a flawless performance. Figures released mid-session revealed that activity in the Chinese manufacturing sector eased in the month of February. As a result the Aussie dollar and the share market retreated in response.

TheASX 200 rose 0.75 per cent to 5055; the All Ordinaries index gained 0.71 per cent to 5072. Value for the day was strong. More than $5bln in shares were traded, with over 2.2 billion transactions. 536 stocks ended higher, 462 ended lower and 368 ended the day unchanged.

The materials sector was the only group to end lower, after sellers homed in on the heels of weaker Chinese manufacturing data. The Flash China Manufacturing PMI for February came in at 50.4 compared to 52.3 in January, falling to its lowest levels in 4 months. Most sectors measured by the survey saw a moderation in activity, although the index remaining above the 50 level indicates that the sector still is still in expansion, albeit modestly. The primary impact on stocks was that the big miners reversed the days early trend. One factor weighing on the minds of investors is the increasing output and capacity on the part of leading miners and the possibility that chinese resource demand will consolidate at lower levels. These themes were remarked upon by outgoing BHP boss Marius Kloppers last week in handing down the miners results. BHP Billiton rose 0.08 per cent to $36.90, Rio Tinto fell 0.85 per cent to $66.15, and Fortescue Metals Group lost 1.66 per cent to $4.75.

Energy stocks were well supported on the day helped by a better than expected result from oil refiner Caltex. The country's largest oil refiner, Caltex Australia, returned to a modest profit of $57M in 2012, largely boosted by lower costs associated with the closure of its Kurnell refinery in Sydney. This result was in-line with the company's guidance provided in Dec of between $45M & $65M. Profit was driven by 6% growth in earnings within its Marketing & Distribution unit, improved refinery reliability, a better tax outcome & increased production. CTX provides over 1/3 of Australia´s transport fuels & operates two refineries. The better setup at its Lytton refinery in Brisbane contributed most to earnings; however $430M in costs linked to the Kurnell conversion held the result back. Looking ahead, Caltex expects to close Kurnell by late 2014 & forecasts continued growth in its Marketing & Distribution unit despite intense competition. A 23cps dividend was declared & will be paid out to eligible shareholders on 4 April. Investors reacted well to the result; however CTX is still down around 3.2% since the start of 2013.

There were mixed performances throughout the insurance sector. QBE fell 1.14 per cent to $13.03 after the group announced a new cost cutting initiative that will see more than 700 jobs sent offshore. Suncorp Group fell 1.76 per cent to $11.73 Insurance Australia Group rose 0.71 per cent to $5.69.

Over the remainder of the week the local reporting season will wind down from its peak of last week. On Tuesday, results include those from AWE Limited, Blackmores, Beach Petroleum, Charter Hall, Flight Centre, James Hardie, Oil Search, QBE, Prime Media, Ramsay Health Care, Seven Group, Transfield and Virgin Australia. On Wednesday earnings results are expected from AGL Energy, Henderson Group, Roc Oil, Sydney Airport, UGL Limited and Wotif. On Thursday, Aquila Resources, Aurora Oil & Gas, Challenger, Harvey Norman, Lynas Corp, Perpetual, Treasury Wine Estates and Woolworths are included amongst companies expected to report earnings.

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