Australian Stock Market Report - Afternoon 3/30/2012

MARKET CLOSE
(4.30pm AEDT)

The Australian sharemarket ended slightly weaker today, however ended the month and the quarter in positive territory. Shares rose by around 0.8 pct in March however jumped by 7.7 pct this quarter (January to March 2012). In fact, we have had the best start to a new year since 2006.

The mining and consumer staple stocks did well today however most other sectors pulled back. Three of the four major banks lost ground, however Westpac (WBC) rose slightly today. The world's largest miner, BHP Billiton (BHP) gained by 1.05 pct or 36 cents to $34.61 while Rio Tinto (RIO) jumped 1.62 pct or $1.04 to $65.40.

Hardware chain, Bunnings is planning to open as many as 85 new stores in Australia. It is also expecting to add 6000 new jobs over the next three years. Bunnings and Coles are both owned by Wesfarmers (WES). WES rose 0.98 pct today.

Australia's largest airline, Qantas (QAN) has announced that ticket prices will rise by as much as $30 on international flights in a fortnight. This is to combat higher fuel prices. QAN shares ended 1.6 pct lower today but have still gained by 20 pct since the start of 2012.

On the economic front today, the latest private sector credit and new home sales reports were issued. Lending rose by 0.4 pct in February, following a 0.2 pct rise in January. Over the year, credit growth held unchanged at 3.5 pct.

Commsec Economist, Savanth Sebastian said that "The private sector credit data tends to be a good forward looking indicator on activity. If borrowings pick up, spending should follow suit over the next few months. In that context the lack of significant growth in business credit is disappointing. At present businesses are cashed up and content to use existing cash facilities and that trend is unlikely to change anytime soon. The data reinforces the financial account report we put out yesterday - Australian companies are cash rich, holding 45.4 per cent of assets in cash and deposits - a 22-year high."

The number of new homes sold in February hit an 11-year low. Mr Sebastian said that "Aussie consumers and home-buyers remain super-cautious and that mood is continuing to constrain activity for retailers and housing-dependent businesses. Anecdotally the recent drop in interest rates is boosting enquiry levels in the housing market, but it is yet to show up in healthy rise in housing activity. And while the latest pick up in new home sales is a positive it is far from a full blown turnaround."

Next week, will be a little busier on the economic front, particularly at the start of the week. On Monday, the latest home prices, building approvals and monthly inflation reading will be posted. On Tuesday, the Reserve Bank of Australia (RBA) will make a decision on rates while a retail trade report will also be issued. The market is expecting rates to remain on hold for yet another month.

In Asia, Japan released a number of reports, including a manufacturing reading, household spending, inflation and job numbers. Japan's unemployment rate fell from 4.6 pct to 4.5 pct, inflation is non-existent while its manufacturing sector expanded slightly. Shares in Japan still eased by around 0.5 pct, while stocks in China and Taiwan improved.

Tonight, the latest consumer spending report will be out of France and the U.S. German retail sales numbers are also expected to be released and improve by around 1.3 pct.

Volume of shares traded came in at 2.67 billion today, worth $8.18 billion. 559 shares were up, 457 were weaker and 397 ended unchanged.

At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is up 0.09 pct or 4 pts to 4349.

Due to daylight savings, most major European markets are now trading between 6pm (AEDT) and 2.30am (AEDT). Futures in Europe are pointing to a slightly stronger start to trade tonight.

Dow Futures are currently a little higher; indicating that U.S stocks could open in the black 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) is weaker and buys US104 cents. The AUD is currently trading at £65 pence and €77.8 cents.

Steven Daghlian
Commsec Market Analyst

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