Australian Stock Market Report – Afternoon 4/12/2012

AFTERNOON REPORT
(5pm AEST)

Local stocks snapped a four day losing streak today, thanks to better than expected jobs numbers and a strong lead from US and European share markets. The All Ordinaries Index (XAO) gained 34.3pts or 0.8pct by close to 4361.6.

Gains were broad-based, with firmer commodity prices lifting the miners. BHP Billiton (BHP) firmed by 0.9pct to $33.90 while Rio Tinto (RIO) added 1.5pct to $64.46 and gold miner Newcrest Mining (NCM) was up 0.4pct to $28.97.

Financial stocks also did well. Shares in Macquarie Group (MQG) were up 1pct to $28.20 while the ANZ (ANZ) firmed by almost 1pct closing at $22.98.

The Ten Network (TEN) today posted a weaker than expected fall in first half profit, blaming a weaker advertising market for the fall. 1H profit eased 70pct to $14.8 million, including a $7.1 million restructuring cost. Sales were down 10.9pct on the period. The network will not pay shareholders a dividend as previously flagged. In early trade, TEN shares eased by 4pct but recovered in the afternoon after the company announced a new line-up of shows in a bid to improve on its earnings. TEN shares added 2.6pct by close to 78c.

Elsewhere, Seven Group Holding (SVW) rose 5.4pct to $10.34 after announcing that its WesTrac heavy machinery unit has agreed to buy the Bucyrus distribution and support businesses
from US machinery giant Caterpillar for around US$400 million. WesTrac will acquire the Bucyrus units in Western Australia and New South Wales states and in the Australian Capital Territory in a deal to be funded via a new five-year debt facility. Discussions are continuing with Caterpillar in relation to the Bucyrus distribution and support businesses in the WesTrac dealership territories in China.

March Labour Force data was released today showing employment rose by 44,000 last month after falling by 15,400 in February. Economists had expected a 7,000 lift in jobs. In March part-time jobs rose by 28,200 after falling by 14,400 in February. Full-time jobs rose by 15,800 after falling by 1,000 in February.

The unemployment rate remained at 5.2pct in February. The participation rate rose modestly from 65.2pct to 65.4pct.

The number of hours worked rose by 0.6pct in March to be up 0.9pct in annual terms.

"The jobs data is unlikely to make waves at the Reserve Bank," said CommSec Economist Savanth Sebastian of the data. "Rather the central bank will be more focused on the current situation in Euro Zone and even the slowdown in China. Any escalation of the Euro Zone debt crisis is likely to prompt the Reserve Bank to move sooner rather than later when it comes to rates.

The soft domestic data in recent weeks adds highlights the need for a rate cut. In our judgement the next interest rate cut should take place in May."

The Australian dollar received a boost on the jobs numbers and at 4.30pm AEST was buying US104.02c, £0.6527 and €79.14c.

On the market overall, a total of 1.88 billion shares were traded, worth $3.76 billion. 550 were up, 395 were down and 393 were unchanged.

At 4.30pm AEST on the futures market, the SFE200 was at 4292, up 39pts or 0.9pct. The Dow Futures was up 56pts or 0.5pct to 12,800.

Ahead tonight, trade data and producer prices are released in the US. Tomorrow, a raft of economic data is released in China.

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