Australian Stock Market Report – Afternoon 4/19/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket improved for the second straight day, with the All Ordinaries Index (XAO) edging higher by 0.3 pct or 14.1 pts to 4441.3. The dollar value of shares traded also was significantly higher than the first part of the week.

Most sectors improved today, however a little weakness from the financials held the rest of the market back.

The energy and healthcare stocks performed strongly with Mesoblast (MSB) up 3.25 pct. MSB is a developer of biological therapies, commercialising stem cell-based products. One of its areas of focus is the development of a non-surgical treatment to lower back pain. MSB shares are up more than 11 pct this year and have more than tripled in value over the past two years.

Oil and gas producers, Woodside Petroleum (WPL) and Santos (STO) both ended higher after recording an improvement in quarterly production today. Sales revenue for STO rose by 50 pct between January and March this year while WPL recorded a 20 pct rise in revenue despite cyclones and bad weather.

Australia's third largest iron ore miner, Fortescue Metals Group (FMG) also released its quarterly production numbers and it is clear that weather has not been its friend. Costs have risen and production has fallen back. FMG has not changed its expectations for the year however and has jumped by 40 pct on the Australian sharemarket this calendar year.

Transport infrastructure business, Asciano (AIO) reached an agreement with the Maritime Union of Australia for container terminal workers across the country. Strike action has already cost AIO over $15 million and lost time with almost two years of negotiations.

Last night, both the U.S and European markets lost ground. Bad loans for Spanish banks rose to their worst levels in close to 20 years. Profit results for some of America's largest companies, such as IBM and Intel were unimpressive overnight.

One of the standouts overnight however was YUM! Brands, the owner of KFC, Taco Bell and Pizza Hut. Profit rose by 73 pct in the first three months of the year. 168 new stores were opened in China over the quarter and YUM! is aiming to open around 100 new stores in India this year. The previously struggling Taco Bell now accounts for around half of the company's American profits.

On the economic front today, the Australian Bureau of Statistics (ABS) released it detailed labour market report earlier in the day. The employment story in Victoria has worsened over the month of March and unemployment is sitting at its worst levels in three years at 6.2 pct. The average number of hours worked has also fallen to a 12-month low of 32.78 hours.

Commsec's Chief Economist, Craig James said that "In North Eastern Melbourne, the jobless rate hit 6.4 per cent in March, well up from 3.6 per cent a year ago. In inner Melbourne the jobless rate has lifted from 3.7 per cent to 6.5 per cent over the past year. Weaker housing activity and tougher conditions for manufacturing are starting to catch up on Victorian businesses. Australia is a land of extremes. In south eastern NSW the jobless rate is just 1.9 per cent but in north Queensland the unemployment rate is recorded at 9.9 per cent. It's important for businesses to closely track the job market changes in their particular regions because conditions can vary sharply."

Tomorrow, the latest report on import and export prices will be released for the month of March. The oil price and a higher Australian dollar will likely be two of the key influences. Sydney Airport traffic results for March will also be issued tomorrow.

Unlike the Australian market, most stocks in the Asia-Pacific region ended a little lower today. Shares in Japan fell 0.8 pct, South Korean stocks eased by 0.25 pct while Chinese equities lost 0.1 pct. Japan recorded a worse than expected trade deficit in March (imports exceeded exports). New Zealand's March inflation reading (CPI) was lower than expected at 0.5 pct. The NZX 50 Gross Index rose 0.07 pct or 2.43 pts to 3525.19.

In Europe tonight, the latest consumer confidence report will be released for March and is expected to remain negative.

In the U.S a number of reports are scheduled for release prior to market open. U.S existing homes sales and weekly unemployment claims are two of the major reports to keep an eye on.

If you enjoy reading up about how huge brands are performing, fasten your seat belts. Tonight will be the busiest session of the earnings season to date in the U.S, with over 125 major businesses announcing their numbers for the first quarter (January to March 2012). This will include the Bank of America, Microsoft and Morgan Stanley.

Volume of shares traded came in at 2.6 billion today, worth $5.51 billion. 519 shares were up, 459 were weaker and 430 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is a little higher.

Due to daylight savings, most major European markets are now trading between 5pm (AEST) and 1.30am (AEST). Futures in Europe are pointing to a slightly stronger start to trade tonight.

Dow Futures are currently also a little higher; indicating that U.S stocks could open in the black tonight. Due to daylight savings taking place in the second week of March in North America and the end of daylight savings in Australia, U.S markets will now be trading between 11.30pm (AEST) and 6am (AEST).

Turning to currencies, the Australian dollar (AUD) buys US103.6 cents. The AUD is currently trading at £64.6 pence and €78.9 cents.

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