Australian Stock Market Report – Afternoon 4-18-13

Afternoon Market Report
(17:00 AEST)

An afternoon of accelerated selling on rising volumes saw local stocks end with a substantial loss. Investors remain concerned about the outlook for commodity prices in the face of rising supply and falling demand against a backdrop of a weakening global growth pulse. Bringing a sharper focus to these concerns in the last 24 hours has been the head of the German central bank who warned that the European recovery may take up to a decade. These themes drove the aggressive selling seen for mining stocks this afternoon.

Market participants were taken aback by the scale of the selling. The leading mining names in the sector have already been marked down in recent months, but particularly following weaker economic reports from China and the US of late. Witness BHP Billiton shares which have fallen in the range of 20%since late February. Fortescue shares were conspicuous with a fall of more than 7% today. This, despite an uncontroversial production report. FMG's 3rd Quarter production report was largely as expected. Production of 25.3Mt of iron ore was a record as its expansion gains momentum. Significantly FMG's ambition of producing 155Mtpa of ore remains on track.

Sectors related to mining continue to attract the attention of sellers. Fertiliser and explosives maker Incitec Pivot is an example of this negative sentiment which has been compounded by recent news of plans to increase capital expenditure. Incitec will build on its US footprint with a $822 million ammonia plant. The plant will be the seventh ammonia plant, and the 10th facility in North America. Incitec will construct the 800,000 tonne-a-year plant at an existing site in in Louisiana. Today IPL shares finished sown by 2.8%

Looking ahead to the European and US sessions; In the UK retail sales figures will be released. In the US, weekly figures on the number of people claiming unemployment benefits will be release. Additionally The Phillidephia Federal Reserve will release its survey of economic activity. A week retail sales report is anticipated in the UK. Investors will be paying close attention to the US data given its ability to move sentiment substantially. Additionally, earnings reports are due from Morgan Stanley, Microsoft and Google.

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