Australian Stock Market Report - Afternoon 3/8/2012

MARKET CLOSE
(4.30pm AEDT)

The Australian sharemarket improved for the first time this week, with the All Ordinaries Index (XAO) jumping by 0.7 pct or 27.8 pts to 4262.2. Eight of twelve sectors rose over the session, with the energy stocks the best performers.

Oil and gas producer, Santos (STO) rose 3.97 pct or 54 cents to $14.14. The miners have had a tough week so far and have slumped by 5 pct over the past four days. BHP Billiton (BHP) gained 0.73 pct or 25 cents to $34.30 while Rio Tinto (RIO) edged higher by 0.38 pct or 24 cents to $62.66 today. Iron ore miner, Fortescue Metals (FMG) was one of the day's best after rising 3.77 pct or 20 cents to $5.51. Its founder, Andrew Forrest is Australia's third richest person.

The major banks all gained ground, with National Australia Bank (NAB) the best, rising by 1.34 pct or 31 cents to $23.38. Westpac (WBC) jumped 0.54 pct or 11 cents to $20.41, Commonwealth Bank (CBA) gained 0.8 pct or 38 cents to $48.04 and ANZ Bank (ANZ) rose late in the session to end 0.18 pct or 4 cents higher to $21.79.

Today, the latest Forbes Rich List was released and showed us that Gina Rinehart is Australia's richest person in addition to being the richest woman in Asia Pacific. There are only three women wealthier than her globally, two of which belong to the Walton family (the founding family of Wal-Mart stores). According to the list, her net worth is $18 billion.

On the economic front today, a report showed that the unemployment rate rose from 5.1 pct to 5.2 pct and that 15,400 jobs were lost in February. All the job losses were in part-time positions while there was no change in full-time employment. The number of hours worked has increased, showing that people are working a little harder.

This was worse than market expectations. It was no big surprise that the resource focused states such as Western Australia have done better than most. Western Australia has the country's lowest jobless rate of just 4 pct, while Tasmania has the highest at 7 pct.

Approximately 10,000 jobs need to be created each month for the unemployment rate to remain steady. Interestingly, if you are 15 years of age or over and work at least one hour a week, you are considered to be employed in these statistics.

Australia's unemployment rate hit a low of 4 pct back in February 2008 and hit a high of 5.8 pct in July 2009 following the collapse of Lehman Brothers.

Commsec's Chief Economist, Craig James said that "The job market is clearly flat as a tack - employers aren't keen to take on new staff and there isn't enough demand for existing employees to work longer hours. Probably the best representation of the job market is the under-utilisation rate as this encapsulates not just unemployed workers but those wanting to work longer hours. The under-utilisation rate is just below the highest levels seen in two years. The job market is clearly going nowhere fast."

In the region today, Japan's quarterly GDP (growth) contracted by 0.2 pct as expected. Tomorrow, a number of reports will be issued in China, including inflation figures, retail sales and the latest trade balance.

In Europe last night, the German, French and British markets all rose by around 0.5 pct. The next 24 hours will be key for the Europeans as the Greeks will need to reach an agreement with private sector on its debt.

Tonight is going to be a busy night for central banks around the world, with the Bank of England, the European Central Bank and the Bank of Canada all meeting to make a decision on interest rates. The Reserve Bank of New Zealand this morning decided to keep interest rates unchanged at 2.5 pct.

In the U.S last night, the number of private sector jobs created in February rose by a slightly more than expected 216,000. This makes it the 25th straight gain in monthly employment. The more important official government report will be released tomorrow night. Apple overnight released its latest iPad3 late in U.S trade however hardly reacted on the market. Apple shares are up 31 pct since the start of January this year.

Tonight, the latest weekly unemployment claim numbers will be released.

It was a relatively busy day on the market today, with the volume of shares traded coming in at 2.09 billion today, worth $5.44 billion. 579 shares were up, 430 were weaker and 381 ended unchanged.

At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is up 0.58 pct or 24 pts to 4165.

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 slightly stronger start to trade tonight.

Dow Futures are currently higher; indicating that U.S stocks could open in the black tonight. American markets open at 1.30am (AEDT). Due to the Americans going back an hour on November 5 last year, U.S markets will be trading between 1.30am (AEDT) and 8am (AEDT).

Turning to currencies, the Australian dollar (AUD) buys US106.1 cents (around 0.5 cent higher than this time yesterday). The AUD is currently trading at £67.3 pence and €80.5 cents.

Steven Daghlian, CommSec Market Analyst

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