Australian Stock Market Report - Afternoon 2/28/2012

MARKET CLOSE
(4.30pm AEDT)

The Australian sharemarket ended a touch lower today despite a stronger start to trade. The All Ordinaries Index (XAO) fell 0.1 pct or 3 pts to 4351.5. The mining, energy and financial sectors ended in the red today, which was enough to drag the XAO into the red.

The S&P/ASX 200 Materials index (a measure of the mining sector) fell 0.2 pct or 23.1 pts to 11339.8. Australia's largest listed company, BHP Billiton (BHP) eased 0.2 pct or 7 cents to $35.75 while the smaller Rio Tinto (RIO) gained 0.45 pct or 30 cents to $67.70.

The S&P/ASX 200 Energy index (a measure of performances in the energy sector) lost 0.59 pct or 85.9 pts to 14394.6. Australia's second largest oil and gas producer, Woodside Petroleum (WPL) fell by 0.7 pct or 26 cents to $36.90, however still is up by 20 pct so far in 2012.

The major banks all lost some ground today, with ANZ Banking Group (ANZ) down 0.91 pct or 20 cents to $21.88, National Australia Bank (NAB) fell 0.85 pct or 20 cents to $23.29, Commonwealth Bank (CBA) eased by 0.59 pct or 29 cents to $49.15 while Westpac (WBC) ended a touch weaker.

Telstra (TLS) was one of the day's better performers though, after Australia's largest telco cleared its final hurdle for its work on the National Broadband Network (NBN) with the ACCC approving its structural separation plans. TLS shares rose 0.93 pct or 3 cents to $3.26.

On the earnings front today, Australia's largest listed insurer, QBE Insurance (QBE) reported a lower than expected full year (Jan to Dec 2011) profit of US$704 million. QBE said that its bottom line was impacted by the abnormally large number of catastrophes in 2011 and a difficult investment environment. The large earthquakes in both Japan and New Zealand, floods and bushfires in Australia, and natural disasters in both the U.S and Thailand significantly affected its earnings. The catastrophes cost QBE US$1.7 billion, almost three times as much as in 2010. QBE announced that its current Chief Executive will be retiring mid-August after leading the company for 14 years.

It will be raising US$500 million via a capital raising and is expecting its insurance profit margin to improve this year. The insurer will be paying out its final dividend of $0.25 a share to eligible shareholders on March 30. This takes full year distributions to $0.87 a share, which is a little lower than consensus. QBE shares have dropped 11% this year, after warning the market in January that profit will fall by between 40% and 50% over the year.

No major data was released in Australia today, however a number of reports will be issued tomorrow, including the latest retail sales report, an update on home prices in Australian cities and private sector credit statistics for January.

In the region today, a report showed that the Japanese consumer picked up spending last month, thanks in large part to increased demand for cars.

Tonight, the latest reports on consumer confidence will be issued in both Germany and the U.S.

The volume of shares traded came in at 2.09 billion today, worth $4.45 billion. 508 shares were up, 502 were weaker and 418 ended unchanged.

At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is up 0.14 pct or 6 pts to 4263.

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.

Dow Futures are currently higher; indicating that U.S stocks could open a touch stronger 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 US107.8 cents, almost 1 full cent higher than this time yesterday. The AUD is currently trading at £68.05 pence and €80.21 cents.

Steven Daghlian, CommSec Market Analyst

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