Australian Stock Market Report – Afternoon 5/10/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket improved for the second time this week today, with the All Ordinaries Index (XAO) edging higher by 0.5 pct or 21.6 pts to 4353.8. It certainly was an eventful session, with stocks treading water this morning in anticipation of the monthly jobs numbers. The market reacted well to the news as did the Australian dollar, however started to weaken following some disappointing signs for China's exports.

European shares sunk to a four-month low overnight and American markets lost ground for the sixth consecutive session. Fears that Greece will have to leave the Eurozone continued to concern investors. Greece is yet to form a government following the elections last weekend. Leader of the far left party in Greece said that he might scrap previous bailout agreements should his party successfully form a coalition. He has two days remaining to form a government; otherwise the Greeks will have to return to the polls again next month.

Today was the busiest day of the week for the release of profit results. National Australia Bank (NAB) became the third major bank in less than a fortnight to release its half yearly profit numbers (October 2011 to March 31 this year). The bank's cash profit was $2.82 billion, but net profit was impacted by its underperforming British business. It announced a 90 cent a share dividend. Both Westpac (WBC) and ANZ Banking Group (ANZ) announced profit results close to $3 billion for the half.

ANZ went ex-dividend today, which resulted in its shares slumping by 4.2 pct or 97 cents to $22.15. This means that if you bought ANZ shares today or plan on purchasing its stock over the next couple of days or weeks, you would not be eligible to receive the next dividend payment of 66 cents a share due to be paid to investors on 2 July.

Global media giant, Newscorp (NWS) today announced a 47 pct rise in its quarterly profit to US$937 million despite the ongoing phone hacking scandal. The company's bottom line was boosted by its cable network and its Hollywood film unit (strong performances from the second Alvin and the Chipmunks film added to its earnings).

Optus recorded a $787 million profit for the 12 months to March 31. Optus will be appealing to the High Court over the Federal Court's ruling which ended the TV Now service for mobile users (where customers could watch free-to-air programs on their phones). Optus is owned by Singapore Telecom.

Oil refiner, Caltex (CTX), AMP and Rio Tinto (RIO) all held their Annual General Meetings (AGMs) with shareholders today. AMP let shareholders use their iPhones to cast votes at the meeting.

BHP Billiton (BHP) shares rose 0.84 pct or 29 cents to $34.62 while the smaller Rio Tinto (RIO) gained 1.16 pct or 71 cents to $61.94.

On the economic front, Australia's unemployment rate improved from 5.2 pct down to 4.9 pct and 15,000 jobs were created in April. This was significantly better than market expectations.

Commsec Economist, Savanth Sebastian said that "Recently the Reserve Bank Governor commented on the pessimistic outlook displayed by Australians compared with foreigner's views on Australia. And if there was a time to be more optimistic it is now. Australia has one of the lowest jobless rates going around in the advanced world. Comparing the job market in Australia with the likes of the US and Europe is like comparing chalk and cheese. Australia's job market remains healthy, supporting growth in the broader economy. And it is still the case that an extra 50,000 odd workers now have jobs compared with two months ago. And that means more latent spending power. Of course in the current environment people are still more likely to be saving rather than spending, but that psych will shift as households adjust to the super-sized rate cut."

In the region, China's trade balance for April was out and came in significantly better than expected. The major concern was the fact that exports grew at almost half the expected pace over the month. Tomorrow will be the busiest day of the month in China for economic news, with inflation, retail sales, production and investment reports all out throughout the day.

In Europe tonight, the Bank of England (BOE) will be making its decision on rates and is expected to stay on the interest rate sidelines for another month. Rates in the U.K are at 0.5 pct. Last week, the European Central Bank (ECB) decided to keep rates on hold at 1 pct. In an interesting move from the Portuguese government, four public holidays will be dropped in another move to cut costs and continue with austerity measures. Two of the public holidays are actually religious festivals. One of the holidays is a day which celebrates Portugal's Independence from Spanish rule almost 400 years ago.

In the U.S tonight, the weekly unemployment claims report will be issued in addition to the American trade balance (which measures the difference between exports and imports in March) and a speech delivered by the Federal Reserve Chairman, Ben Bernanke titled "Banks and Bank Lending" in Chicago.

Volume of shares traded came in at 2.09 billion today, worth $5.87 billion. 499 shares were up, 473 were weaker and 411 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is up 0.07 pct or 3 pts to 4304.

Due to daylight savings, most major European markets are now trading between 5pm (AEST) and 1.30am (AEST). Stocks are expected to open a little higher tonight.

Dow Futures are 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) has improved against the greenback following the better than expected jobs report and buys US101.1 cents. The AUD is currently trading at £62.7 pence and €78.04 cents.

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