Australian Stock Market Report – Afternoon 4/4/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket had an uninspiring session today, with the All Ordinaries Index (XAO) down 0.1 pct or 5.5 pts to 4418.9. Shares were down by as much as 0.5 pct at one point following some worse than expected economic data out at 11.30am (AEST). As the day wore on shares steadily wiped away those early losses.

The miners were the biggest drag on trade, with BHP Billiton (BHP) down 1.25 pct or 44 cents to $34.74. Unions are planning to step up industrial action against the company, with some expectations that strikes have cost BHP around US$2 billion. Unions are fighting for 21 conditions to be met, including disputes over rosters.

Three of Australia's four largest banks improved today, with Westpac (WBC) the best performer after rising 1.37 pct or 30 cents to $22.12. National Australia Bank (NAB) gained 0.73 pct or 18 cents to $24.79, ANZ Banking Group (ANZ) edged a little higher while Commonwealth Bank of Australia (CBA) eased slightly.

The country's largest insurance company, QBE Insurance (QBE) held its Annual General Meeting (AGM) today and reaffirmed its profit guidance, essentially saying it is still on track this year. Its annual profit fell by 45 pct last year, with catastrophe claims costing the company three times more than in 2011. QBE shares rose 3.38 pct or 47 cents to $14.37.

David Jones (DJS) went ex-dividend today for its 10.5 cent a share dividend. This means if you bought DJS shares today onwards, you would not be eligible to receive its next dividend payment.

On the economic front, Australia recorded its second consecutive trade deficit in February, something which has not happened in around two years. Exports fell by 2 pct and a $480 million deficit was recorded. The report disappointed the market and pushed the Australian dollar lower. The early timing of the Chinese New Year continued to bear part of the blame.

Commsec Economist, Savanth Sebastian said that "There is no need to hit the panic buttons just yet. It is important from the outset to highlight that there is a high degree of volatility in the data due to the unusual early timing of the Chinese New Year and as such the January and February deficits may be reversed in March. In addition Aussie mineral exporters have been affected by rains and industrial action and that may have exacerbated the weakness in the figures."

He went on to say that "Having said all that, the second consecutive trade deficit is unlikely to ease investor concerns about the extent of the slowdown in China. Especially given that even if you add the results for January and February it is still well above the accumulated deficits of the prior years. Understandably the result is backward looking and the next couple of months will be crucial in gauging how well Aussie exporters."

In the region, shares in Japan fell 2.3 pct while South Korean stocks lost 1.84 pct. Markets in China, Hong Kong and Taiwan were all closed due to public holidays today. Tomorrow, markets in India and the Philippines will be closed.

In Europe tonight, the European Central Bank (ECB) will be making a decision on interest rates at its monthly meeting. The market is expecting rates to remain on hold for the bank's fourth consecutive meeting. The latest retail sales report will also be issued along with the ECB Press Conference and German factory orders.

In the U.S, the latest ISM services index will be released while the ADP Non-Farm Employment report is scheduled to be issued at 10.15pm (AEST) and could very well be a driver for markets in early American trade. Consensus (market expectations) is for an additional 209,000 jobs to have been created in March. The more important official government numbers will be posted on Friday night.

Tomorrow in Australia, the latest tourist arrival and departure numbers will be posted in addition to engineering construction statistics.

Volume of shares traded came in at 2.14 billion today, worth $4.64 billion. 427 shares were up, 592 were weaker and 394 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 weaker start to trade tonight.

Dow Futures are currently a little lower; indicating that U.S stocks could open in the red 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 US102.7 cents. The AUD is currently trading at £64.6 pence and €77.8 cents.

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