Australian Stock Market Report – Afternoon 3/18/14

EVENING REPORT
(4.40pm AEDT)

The Australian sharemarket ended higher for just the second time in seven trading days. The All Ordinaries Index (XAO) finished 0.5 per cent firmer to 5360.2, remaining below the 5400.0pt mark but bouncing from a one-month low. All sectors finished higher by the close.

Department store owner David Jones (DJS) rose by 1.22 per cent today while Myer (MR) slipped by 0.38 per cent. DJS re-appointed management consulting firm Port Jackson Partners to review and assess the value of synergies if DJS and MYR were to merge. DJS is up around 9.7 per cent since 1 January while MYR is 3.5 per cent lower.

The big four banks all improved today by as much as 1 per cent, Telstra edged higher while Newcrest Mining (NCM) slumped by 7.6 per cent. NCM is up 44 per cent since the start of this calendar year however.

There were two pieces of data of note in Australia today: the Reserve Bank board minutes and numbers on imports. The RBA board members still expect a period of 'stability in interest rates' for now (no aggressive rate hikes or cuts for now). The RBA downplayed the direct impact on the broader economy of recent job losses in the aviation and automobile industries; however expressed concerns about the impact this could have on consumer confidence.

Imports across the economy rose by 1 per cent in February. This essentially highlights the recent pick-up in economy wide spending. Retail spending has picked up for nine consecutive months, job creation was greater than expected last month and the Australian economy is growing at an annual pace of around 2.8 per cent.

In China, house prices rose by 8.2 per cent in the year to February across 70 Chinese cities. This is slower than the 9 per cent jump in prices in the previous release. Foreign Direct Investment (the amount of money global economies invest in China) is up 10.4 per cent over the first two months of the year (when compared to the first two months of 2013). This is a pullback from January's reading; however keep in mind that this should be expected due to the Chinese New Year which took place in February. The first week of February essentially resulted in the closure of many businesses, which has an obvious impact on the Chinese economy.

At lunch, 1.72 billion shares changed hands, worth $4.55 billion. 525 stocks finished higher, 440 in the red and 355 closed flat.

Looking ahead, the two day meeting of the U.S. central bank kicks off tonight. On Thursday morning the Fed will announce what it plans to do with its US$65 billion stimulus strategy. Janet Yellen will lead the meeting for the first time.