Australian Stock Market Report – Afternoon 4/2/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket started the day off almost 1 pct higher and then gave away its gains as the day progressed. The All Ordinaries Index (XAO) eased by 0.1 pct or 3.6 pts to 4416.4. The mining and energy sectors rose strongly while almost all other sectors lost ground today.

The world's largest miner, BHP Billiton (BHP) rose 1.47 pct or 51 cents to $35.12 while Rio Tinto (RIO) gained 1.21 pct or 79 cents to $66.19. Australia's third largest iron ore producer, Fortescue Metals (FMG) jumped by 2.41 pct or 14 cents to $5.95.

The major banks all lost ground today, with ANZ Banking Group (ANZ) down by 0.86 pct or 20 cents to $23.06 while Westpac (WBC) fell 0.78 pct or 17 cents to $21.72. Both Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) fell slightly.

Australia's largest airline, Qantas (QAN) fell by 3.4 pct today, however has gained by more than 17 pct since the start of 2012. Last week, QAN announce a rise in fuel surcharges on international flights and received a broker downgrade today.

A number of economic reports were issued today, including a report on home prices across the country. Australia's property market is showing some signs of stabilising, after home prices rose in March. Over the past 12 months however, home values have fallen in all capital cities. Hobart and Brisbane have been the worst performing cities, with prices falling by more than 6 pct in both regions.

Commsec Economist, Savanth Sebastian said that "There is good news on home prices but more bad news for builders. In Sydney, agents report solid demand for auctions over the weekend, while nationally prices have lifted for the second straight month. But for builders, approvals have slumped yet again. Simply, demand exceeds supply in many regions, supported by improved affordability and higher migration. While builders will continue to compete hard for available work, home owners are likely to see the value of their homes rise over the year. CommSec tips a modest 3 per cent lift in prices over 2012."

A report has shown that Australia's manufacturing sector has contracted for the first time in a number of months, with a reading of 49.5. Any number below 50.0 indicates industry contraction. The decrease in manufacturing activity was partly due to slumps in the clothing, footwear, furniture and wood products sub-sectors. Those surveyed in the monthly study are remaining quite cautious about the future, with a strong currency; softer demand and the carbon tax all key concerns.

The national average price of unleaded petrol eased by 0.1 cent to 150.6 cents last week. Mr Sebastian said that "There hasn't been much in the way of good news for motorists over the past few months. But that seems to be about to change - at least in the short term. The great news is that across most of the capital cities petrol prices peaked over the weekend and are now on the way down. In fact if the discounting cycle holds true, pump prices should fall over the next 7-8 days - effectively ensuring that motorists are able to purchase cheaper fuel over the Easter long weekend."

Yesterday, China's manufacturing PMI (a report which measures the performance of the manufacturing sector) rose by a more than expected margin to 53.1. A reading above 50.0 indicates industry expansion. Japan's Nikkei 225 and South Korea's KOSPI index both rose by around 0.2 pct today.

Markets in China and Vietnam were closed today due to public holidays. Tomorrow, China's sharemarket will be closed tomorrow once again due to a national holiday. The rest of the week will be quiet on the economic front in the region. Tomorrow in Australia, the Reserve Bank will make a decision on interest rates tomorrow. The market is expecting rates to remain on hold.

In Europe tonight, the latest manufacturing readings will be issued while employment reports will be released out of both Italy and also the broader Eurozone. Later on in the week, both the Bank of England and the European Central Bank will be making decisions on their respective interest rates.

In the U.S tonight, the latest manufacturing report will be out later this evening.

Volume of shares traded came in at 2.48 billion today, worth $4.87 billion. 511 shares were up, 530 were weaker and 379 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is up 0.23 pct or 10 pts to 4343.

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 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 11.30am (AEST) and 6am (AEST).

Turning to currencies, the Australian dollar (AUD) buys US104.1 cents. The AUD is currently trading at £65 pence and €77.9 cents.

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