Australian Stock Market Report – Afternoon 4-2-13

AFTERNOON REPORT
(4.45pm AEDT)

The local share market resumed trade following the Easter break on a positive note, with financial stocks driving the market higher after the Reserve Bank left interest rates on hold at 3% as expected.

The Commonwealth Bank (CBA) was the best of the big four banks, rising by 1.4% to $68.95.

US markets were mixed overnight, while major European markets will open for the first time this evening following the Easter break.

Mining stocks were the biggest drag locally. Shares in Fortescue Metals Group (FMG) fell 3.6% to $3.80 with the iron ore price unchanged at US$137.30 a tonne.

Surfwear retailer Billabong (BBG) placed itself in a trading halt today, as negotiations continue with two private equity suitors. Due diligence on the bids was expected to be completed by Thursday and there are fears one or both suitors could pull out of or significantly lower their $1.10 per share bids. BBG shares were halted at 73c, with one broker valuing the company at 59c per share, almost half the value of the takeover bids.

The Reserve Bank Board left the official cash rate at 3% for the fourth straight month. The next RBA Board meeting is on May 7 2013. CommSec believes rates will remain on hold in the short term, with Chief Economist Craig James citing if the Reserve Bank was to cut rates in the next few months it would likely be prompted by fresh global turmoil, especially combined with evidence of weaker US and Chinese growth, low domestic inflation and a high Australian dollar.

The Australian dollar ended the day's trade at US104.57c, £0.6864 and €81.32c.

On the market overall, a total of 1.6 billion shares were traded, worth $4.5 billion. 437 were up, 514 were down and 386 were unchanged.

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