Australian Stock Market Report – Afternoon 3/6/14

EVENING REPORT
(4.40pm AEDT)

The Australian sharemarket ended unchanged, following two days of gains. Despite the market's uninspiring finish, the All Ordinaries Index (XAO) is still trading at a five and a half year high. Better than expected retail spending and international trade reports briefly propped the sharemarket higher earlier today.

Tensions continue in Ukraine; however the price of oil has fallen by around 1.5 per cent for two straight days. Investors are hoping a diplomatic solution will take place eventually. Oil and gas producer, Santos (STO) rose by 0.86 per cent while Woodside Petroleum (WPL) fell by 0.29 per cent. About a quarter of Europe's oil and gas needs are provided by Russia with pipelines through Ukraine delivering a large chunk of the oil and gas.

A monthly report on retail spending today beat market estimates. Retail trade rose for the ninth straight month, surging by 1.2 per cent in January. Annual spending has lifted by 6.2 per cent; the biggest monthly surge in four years. Traditionally January tends to be a slow month for retailers (Christmas spending hangover). Spending rose in a number of different types of retail businesses, such as furniture, floor covering retailers, housewares, cafes and restaurants. Retailers David Jones (DJS), Myer (MYR) and JB Hi-Fi (JBH) all finished significantly firmer by the close.

Billabong (BBG) slumped by 1.6 per cent as news that the surfwear retailer could be facing a class action from investors surfaced. BBG shares slumped by 44 per cent in just one day following a profit downgrade in December 2011. Just four months earlier, BBG had forecast profit growth.

A bigger than expected $1.4 billion trade surplus was posted in January ($840m improvement in December). This is the biggest trade surplus in two and a half years. Trade with China makes up 36.3 per cent of Australia's total exports.

Qantas (QAN) rose by 0.88 per cent today after the Sale Amendment Bill (which would lift foreign ownership limits) passed the lower house. The bill still needs to pass a Senate Vote (which seems unlikely).

At the close, 2.1 billion shares changed hands, worth $5.3 billion. 502 stocks finished higher, 464 in the red and 340 were unchanged.

Tonight, both the European Central Bank and the Bank of England will be holding their monthly meetings. No change to rates is expected from either central bank. Tomorrow night, the monthly U.S. non-farm payrolls (most important American jobs report will be out). This could set the tone for Australian shares early next week.