Australian Stock Market Report – Afternoon 5-3-13

MARKET CLOSE REPORT

(5pm AEST)

The Australian sharemarket improved for the second consecutive week, albeit only modestly. The All Ordinaries Index (XAO) edged higher by 0.5 per cent over the five past days and finished largely flat today.

This has been an eventful week with significant gains on Monday and Tuesday offset by falls recorded over the past few days. Chinese manufacturing data was disappointing on Wednesday and Thursday and showed that the industry is still expanding, however at a slower the forecast pace. A drop in building approval numbers locally increased the likelihood of a rate cut to 56 per cent today. The European Central Bank (ECB) cut interest rates for the first time in 10 months. Markets in France, Germany, Japan, Hong Kong and Singapore were closed on Wednesday due to the May Day public holiday while Chinese sharemarkets shut their doors from Monday through to Wednesday.

Westpac's (WBC) improved profit and a higher dividend did little to boost its share price by the close, with WBC down 1 per cent or 35 cents to $33.55. Investment bank Macquarie (MQG) however jumped by 10.88 per cent or $4.23 to $43.11, making it the best daily improvement of the year for the bank. Commonwealth Bank (CBA) dropped by 1.99 per cent while ANZ Banking Group (ANZ) gained by 0.32 per cent.

Telstra (TLS) ended higher by 0.59 per cent and has had approximately a fortnight of uninterrupted gains. The high yielding stocks such as TLS and the major banks have been among the most substantial improvers this calendar year. The big four are up by as much as 30 per cent since January 2013.

Looking ahead, the latest European economic forecasts are scheduled for release at 7pm (AEST) tonight while the monthly US non-farm payrolls will be issued at 10.30pm (AEST). The result of this jobs report could be a key influence of markets early next week if a surprising result is announced.

Volume of shares traded came in at 1.26 billion today, worth $4.31 billion. 480 shares were up, 452 were weaker and 352 ended unchanged.

Turning to currencies, the Australian dollar (AUD) lost some ground against the greenback this week, buying US102.5 cents, is trading at £65.9 pence and €78.3 cents. The Euro has spiked higher against the US dollar at the open of European trade following yesterday's slump.

Australia is a commodity based economy, with commodities in general accounting for almost 80 pct of all our exports over the past nine months. In essence, when the going gets tough globally, there is fear of less demand for our commodities, which tends to result in a weaker AUD.

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