Australian Stock Market Report - Afternoon 3/16/2012

MARKET CLOSE
(4.30pm AEDT)

Despite a late attempt at a comeback this afternoon, the Australian sharemarket ended in the red for the third time this week. The All Ordinaries Index (XAO) eased by 0.1 pct or 2.2 pts to 4364.7. The miners were a drag on trade despite slightly stronger commodity prices overnight.

Today, Australia's second largest airline Virgin Australia Limited (VAH) told the market it will go ahead with its new company split plan. The company said that "Virgin's proposed new structure of its business designed to ensure ongoing compliance with the Air Navigation Act (ANA) which limits foreign ownership of Australian international airlines to 49%, all conditions of the proposal have been satisfied or waived."

The airline has given the shares in the international business a nominal value of 0.0001 cents and full details of the detail can be found within the Information Statement released to the ASX on 23 February 2012. VAH shares ended flat.

Department store owner, Myer (MYR) has had a tough week, falling by a touch over 3 pct after delivering an $88 million profit for the 1H12 (26 weeks to January 28). This was lower than market expectations. Its best performing categories were, Womenswear, Childrenswear and Cosmetics.

The world's largest miner, BHP Billiton (BHP) fell 0.6 pct or 21 cents to $34.97 while the smaller Rio Tinto (RIO) edged higher by 0.29 pct or 19 cents to $65.12. Gold producer, Newcrest Mining (NCM) rose 0.1 pct while Australia's second largest oil producer Woodside Petroleum (WPL) eased by 0.5 pct.

Westpac (WBC), National Bank (NAB) and ANZ Banking Group (ANZ) all jumped by around 1 pct today.

No major economic news was released in Australia today, as is usually the case on Friday. Next week will be extremely quiet on the economic front with a lack of market moving figures scheduled for issue. On Tuesday, the Reserve Bank will release its board minutes.

Commsec's Chief Economist, Craig James said that "On Tuesday, the Reserve Bank issues the minutes of the March 6 Board meeting, a meeting that elected to leave interest rates on hold. Certainly no economist had tipped a rate cut at that meeting, but investors will comb the minutes in an attempt to hone in on the Bank's "hot button" issues. That may prove fruitless given that the Reserve Bank is in that "happy place" at present, but it is still a task worth exploring."

It was a quiet session in the region for economic news with the issue of Bank of Japan's (BOJ) latest monetary policy meeting minutes one of the only releases. The central bank's Governor, Masaaki Shirakawa said he would take a 30 pct annual pay cut to $286,000. The BOJ said the savings might be used for the reconstruction efforts in Japan following last year's devastating natural disasters.

In Europe last night, stocks gained for the seventh consecutive session, with major markets hitting fresh 8-month highs and were boosted by some better than expected economic news in the U.S.

Tonight, Italy will be issuing its latest trade balance which is expected to be come in at a €1.62 billion surplus. This will be released at 8pm (AEDT) in early European trade.

In the U.S last night, American markets improved for an impressive seventh straight day, with the S&P500 index ending above 1,400 pts for the first time since June 2008. This is one of the most popular measures of U.S market performance. The new Apple iPad went on sale today in Australian and nine other countries and seems to have proved popular once again. Apple shares have improved by 45 pct this calendar year, which is five times better than the broader American markets and around eight times higher than the Australian market Year to Date (YTD).

The Libyan Stock Exchange has come back online after being shut for 12 months. The stock exchange only trades for 90 minutes a day compared to the six hours of trade in Australia daily.

Tonight, February inflation numbers will be out, in addition to industrial production and a consumer confidence report.

Volume of shares traded came in at 3.2 billion today, worth $7.11 billion. 550 shares were up, 486 were weaker and 392 ended unchanged. The peak in volume was due to the index option expiry day yesterday.

At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is flat.

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 lower; indicating that U.S stocks could open in the red tonight. Due to daylight savings taking place in the second week of March in North America, U.S markets will now be trading between 12.30am (AEDT) and 7am (AEDT).

Turning to currencies, the Australian dollar (AUD) buys US105.3 cents, which is a little lower than this time last week. The AUD is currently trading at £67 pence and €80.5 cents.

Steven Daghlian, CommSec Market Analyst

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