Australian Stock Market Report – Afternoon 2/7/2013

Afternoon Market Report

The local share market consolidated against a mixed picture for International and regional indices on Thursday. Local employment data generated conversation about the RBA's next move on rates whilst corporate news was on tap from a host of corporates including National Australia Bank and Telstra.

The ASX 200 closed up 0.3% at 4935, its best close since April 2011. $4.5 billion worth of shares were exchanged, a respectable number considering that investors remain focussed on the next 3 week of profit results.

In general terms financials were well supported over the session, Westpac was the only one of the big four banks to lose ground over the session to $27.96 a loss of 17 cents or 0.65. National Australia Bank rose almost 1.9% after reporting that first-quarter cash earnings had risen by 3.6% to a record $1.45 billion. The result was driven by factors including improving margins in business banking , while bad debts fell 10%.

Elsewhere Telstra reported that increased numbers of mobile customers helped increase in its first-half net profit by 8.8% to A$1.6 billion, the shares rose 1.3%

Webjet announced earnings of $8.5 million against a result of $8.2 million in 2011. This modest growth was constrained by the purchase of the Zuji travel agency and the Dubai launch of Lots of Hotels which is aimed at the Middle Eastern and African markets. The half-year net profit of $5.7 million was 5% lower than the $6 million net profit in 2011/12. The group spoke of the challenging conditions in the leisure travel market, although Webjet´booking numbers have remained resilient increasing by 7%, countering the market average of 4%-5%.A fully franked interim dividend of six cents was declared, Webjet´s shares rose 3% to $4.82.

On the economic front the January employment report was the key release. Figures showed that Employment rose by 10,400 in January after an improved result for December. In December, employment fell by 3,800 jobs, not 5,500 as previously reported. Economists had expected a 5,000 lift in jobs in January. The unemployment rate was steady at 5.4 per cent in January. The number of hours worked fell by 0.2 per cent in January after an upwardly-revised gain of 0.1 per cent in December. Hours worked stand 1.2 per cent higher than a year ago.

In Europe tonight the markest attention attention turns squarely back to the ECB today. The main event will be Mr. Draghi's post meeting press conference. There should be no change to monetary policy at the meeting itself.Mr. Draghi will likely maintain his upbeat tone of 2013 so far. Evidence from the Eurozone economy continues to improve, a return to positive GDP growth is a possibility already by QI 2013. In the UK the BOE meeting should be a non event today. Attention will instead be focused on BoE Governor designate Mark Carney at his testimony to the Treasury Select Committee. Mr. Carney will discuss monetary policy and whether the current policy framework is the appropriate one for the UK.

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