Australian Stock Market Report – Afternoon 4/26/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket edged higher for the second time this week, with the All Ordinaries Index (XAO) ending 0.3 pct or 11.1 pts stronger to 4445.0. In the first 15 minutes of trade this morning, the market hit a high of 4466.2 (0.75 pct rise) only to gradually give back most of those gains throughout the session.

Both U.S and European markets did well last night, giving us something positive to work with today following the ANZAC Day public holiday.

A number of stocks struggled, namely Seven West Media (SWM) and Newcrest Mining (NCM). SWM is the owner of the Seven Network. It warned investors that the anticipated improvement in its advertising space now seems quite unlikely and received a broker downgrade. SWM shares fell 22.81 pct or 86 cents to $2.91 and has effectively wiped out all of this year's gains in just one session. Fairfax Media (FXJ), the owner of the Sydney Morning Herald, the Financial Review and a number of radio stations fell by 2.78 pct or 2 cents to 70 cents.

Australia's largest gold producer, Newcrest Mining (NCM) fell 3.87 pct or $1.03 to $25.57 and has fallen for five consecutive sessions. Earlier in the week, the miner lowered its gold and copper production forecasts for the financial year. It is now trading at around its worst level since December 2008.

Rail freight operator, QR National (QRN) rose by 1.1 pct or 4 cents to $3.67 today. QRN said it is considering the construction of a new rail network in the Pilbara (W.A). This would make it easier for some of the smaller iron ore miners to transport the commodity to port. Australia's third largest iron ore miner, Fortescue Metals (FMG) fell 2.24 pct or 13 cents to $5.68.

The world's largest miner, BHP Billiton (BHP) ended largely flat, while Rio Tinto (RIO) rose 0.85 pct or 56 cents to $66.16.

The big four banks all improved by as much as 1 pct, with Commonwealth Bank of Australia (CBA) the best of the day.

The retailers ended mixed, with Kathmandu (KMD) and David Jones (DJS) finishing flat, Myer (MYR) and Harvey Norman (HVN) higher and Billabong (BBG) 2 pct lower.

Most markets in the region ended higher today, with shares in China and Taiwan the exceptions.

No major data was released in Asia today however tomorrow will be the busiest day of the week and one of the most eventful of the month for Japan. The Bank of Japan (BOJ) is due to meet for the second time this month and will publish its new economic forecasts for the world's third largest economy. The latest inflation, retail sales and household spending reports are all due for release.

European shares rose for the second straight day, but are still a little lower over the week. The weakness is partly due to worse than expected signs for the region's manufacturing industry on Monday. The U.K has officially fallen back into recession, with two consecutive quarters of negative growth. It now joins Denmark, Italy, Spain and the Netherlands in a technical recession. British sharemarkets underperformed last night.

Greece has halted welfare payments to around 200,000 people in an effort to crack down on welfare abuse. There were around 9,000 centenarians receiving age benefits, which prompted officials to investigate the unusually high number. It is believed that a number of these 'centenarians' had already passed away, however their families were still receiving benefits from the government. An official said that the nation could save as much as $1 billion a year by reviewing these sorts of payments.

No major data is expected in Europe tonight.

In the U.S, the Federal Reserve had its monthly meeting on interest rates and as expected vowed to keep interest rates at close to 0 pct for at least the next few years. The Fed said that the U.S economy is growing moderately and have not ruled out taking further action to stimulate the economy if need be. The earnings season continues in North America and tonight will be the biggest day of the season to date, with 314 companies issuing their profit results. This will include Colgate-Palmolive, Bristol-Myers, Deutsche Bank, Exxon Mobil, Amazon.com and ResMed.

The world's largest company, Apple (AAPL;us) recorded a 94 pct jump in its quarterly profit to US$11.6 billion this week. It sold 35.1 million iPhones and 11.8 million iPods over just three months. Close to 60 pct of the company's revenue can be attributed to iPhone sales. Approximately a quarter of its sales took place in Asia-Pacific. Apple shares rose by 8.9 pct overnight, taking the gains for the year so far (Year to Date) to 50.62 pct.

Volume of shares traded came in at 2.12 billion today, worth $4.61 billion. 486 shares were up, 535 were weaker and 468 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is up 0.14 pct or 6 pts to 4387.

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 stronger start to trade tonight.

Dow Futures are currently 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) is stronger and buys US103.9 cents. The AUD is still around US4 cents lower against the greenback than this time last year. The AUD is currently trading at £64.1 pence and €78.3 cents.

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