Australian Stock Market Report – Afternoon 4/5/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket ended a little lower for the third time this week with the All Ordinaries Index (XAO) down 0.4 pct or 16.6 pts to 4402.3. Our miners have struggled this week, with BHP Billiton (BHP) down 0.86 pct or 30 cents to $34.44 while Rio Tinto (RIO) dropped 1.66 pct or $1.10 to $65.29 today.

Telstra (TLS) has been one of the best performers recently, gained for part of the day and then lost ground in the second half of the session. TLS eased 0.3 pct or 1 cent to $3.35.

Yesterday, David Jones (DJS) shares fell sharply after going ex-dividend. Harvey Norman (HVN) went ex-dividend today and lost 4.8 pct on the market. HVN will be paying out a 5 cent a share dividend to eligible shareholders on the 7th May. If you bought HVN shares today onwards you would not be eligible to receive this distribution.

The major banks were mixed today, with Westpac (WBC) down 0.3 pct and was the worst of the big four. Commonwealth Bank (CBA) rose 0.32 pct.

On the rural front overnight, the price of wheat fell 2.9 pct, corn eased by 0.25 pct while soybeans became slightly more expensive. The U.S is the largest exporter of soybeans, corn and wheat.

Most major markets will be closed tomorrow due to public holidays. This includes markets in Australia, New Zealand, the U.S and U.K, Hong Kong, Singapore, the Philippines, India and Thailand. Australian shares will not trade on Monday either.

No major economic data was issued today in Australia however the Australian Bureau of Statistics (ABS) did release a report on tourist arrivals and departures. Despite a stronger Australian dollar (AUD), more travellers are visiting Australia. There has been a 10 pct increase in short-term visitors from China over the past 12 months (a bigger increase than any other country).

However, there still are more people coming to visit Australia from New Zealand than from another other nation. There are currently more than 900,000 people employed either directly or indirectly by the tourism industry.

Yesterday, 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."

On Wednesday, a report was issued 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."

On Tuesday, as expected the Reserve Bank of Australia (RBA) kept rates unchanged at 4.25 pct for the fourth consecutive meeting. The good news for mortgage holders however is that the market is factoring in an 83 pct chance that interest rates will be cut at the RBA's next meeting in May. Rates are currently 0.5 pct lower now than at this time last year.

Next week, a number of reports will be issued. On Tuesday, the latest business confidence numbers will be released along with the ANZ job advertisement report. On Wednesday, we will find out just how confidence Australian consumers are in addition to the latest reading on home loans. The March jobs report will also be issued with the unemployment rate expected to edge higher to 5.3 pct.

Volume of shares traded came in at 1.96 billion today, worth $4.15 billion. 348 shares were up, 637 were weaker and 406 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is unchanged

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 US102.9 cents. The AUD is currently trading at £64.8 pence and €78.3 cents.

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