Australian Stock Market Report – Afternoon 3/5/2013

Afternoon Market Report

Tuesday saw a generally positive session for regional stocks in the aftermath of Monday's selling. Investors continue to keep a wary eye on the Shanghai Composite index. From a technical perspective the Chinese index appears vulnerable given its 3.7% decline on Monday.

One of the recent features of the local market has been the willingness of investors to support the market in the face of weakness. This was again evident today with almost $5bln in shares having been transacted.

The ASX200 index rose 1.3 per cent to 5,075.4 points, while the broader All Ordinaries index gained 1.19 per cent at 5088.1 points.

Financials and Consumer Staples were the best improvers on the session. The latter group was helped by better than expected retail trade numbers for January. The figures showed a rise of 0.9 per cent in the first month of the year marking the best start to a calendar year since 2007. The annualised rate of retail spending growth rose from 2.4 per cent to 3.0 per cent. Sales at large chain stores were flat in January to be up 3.5 per cent on a year ago. One of the key positives was the breadth of improvement in retail activity with seven of the eight states and territories registering improvements. The data supports the broader picture of an improving atmosphere around household psychology which is being supported by rising equity markets and an improving property market. Woolworths finished at $35.15, up 10 cents or 3.1%, Wesfarmers closed at $42.20 up 11 cents or 2.7%, Metcash settled at $4.13 a gain of 2 cents or 0.48%, JB HI-FI closed the session at $13.44 a loss of 11 cents or 0.81%, Harvey Norman rounded out the day at $2.62 up 6 cents or 2.3%, David Jones closed at $2.97 a gain of 10 cents or 3.4%, Myer closed at $2.85 a gain of 7 cents or 2.5%

Banks remained well supported despite the Reserve Bank leaving interest rates on hold at their March meeting today. The Central bank's perspective in relation to rates remained the same compared to last month. The RBA highlighted that "The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand. The bottom line being, if things go pear shaped the RBA will cut rates. The NAB closed at $30.59 a gain of 49 cents or 1.62%, CBA settled at $68.68 a gain of $1.56 or 2.3%, Westpac ended at $31.25 a gain of 89 cents or 2.9%, ANZ settled at $28.87 a gain of 51 cents or 1.8%, Bank of Queensland finished the session at $9.30 a gain of 31 cents or 3.4% Bendigo Bank settled at $9.98 up 37 cents or 3.8%.

Looking ahead Wednesday sees the release of the most important data point for the week and arguably the quarter. GDP data for the December quarter will provide a picture of how the Australian economy ended the year. Commsec expects the figures to reveal the economy is expanding in line with its long term trend. The report will confirm that the Australian economy's out performance story of the past four years continues, meaning that the record of uninterrupted growth since the early 1990s recession remains intact. The partial data available to date suggests that a growth rate of 0.8% looks achievable delivering an annualized growth rate in the range of 3.2% (revisions aside). Growth in calendar 2012 would average out at around 3.6%, the best outcome since 2007 which goes a long way in explaining the RBA's stance on rates at present.

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