Australian Stock Market Report – Afternoon 5/11/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket fell for the third time this week, with the All Ordinaries Index (XAO) down 0.3 pct or 11.1 pts to 4342.7. Shares have slumped by 2.6 pct this week locally, which is the worst weekly performance since November 2011. Only around 30 pct of listed companies improved today.

The energy, mining and financial sectors make up around 65 pct of the Aussie market and all three ended in the red. ANZ Banking Group (ANZ) was the last of the major banks to announce its rate cut. Interest rates were cut by 0.37 pct, which equates to a saving of around $20 a week on an average sized ($280,000) home loan.

All four big banks lost ground today, with Westpac (WBC) the worst down 0.79 pct or 18 cents to $22.72, ANZ fell 0.5 pct or 11 cents to $22.04, Commonwealth Bank of Australia (CBA) eased by 0.19 pct or 10 cents to $51.80 and National Australia Bank (NAB) ended largely flat.

Surfwear retailer, Billabong (BBG) has ruled out the idea of a capital raising. BBG shares fell by around 1.7 pct today but have improved 26 pct this year. Despite the healthy gains, keep in mind that BBG shares plummeted by 78 pct last year.

One of Australia's largest operators of funeral homes and cemeteries, Invocare (IVC) held its Annual General Meeting (AGM) today. IVC shares rose by 1.1 pct, are up for the fourth straight year (up close to 7 pct this year), 50 pct higher than at the start of 2009. IVC shares have also improved eight of the last nine years.

The world's largest miner, BHP Billiton (BHP) fell 0.72 pct or 25 cents to $34.37, Rio Tinto (RIO) dropped by 1.4 pct or 87 cents to $61.07 and Newcrest Mining (NCM) rose by 2.47 pct or 62 cents to $25.75.

In the region, it was the biggest day of the month for economic news out of China. Inflation did not surprise but a number of other releases including retail sales and investment fell short of market forecasts.

Commsec Chief Economist, Craig James said that "The continued easing of inflationary pressures and sluggish economic data keeps the door ajar for Chinese authorities to stimulate the economy. Consumer prices fell in the latest month while producer or business prices are lower than a year ago. In addition data on investment, production and retail sales were below market expectations. While the door is open for an easing of bank reserve requirements or lower interest rates, it is clear from the central bank's quarterly report that it will weigh factors carefully before seeking to boost growth. The People's Bank of China noted yesterday that ´´The overall price trend is falling, but it has not yet stabilized, and we need to closely watch the upside risk for prices in the future.´´ China hasn't cut the bank reserve requirement since February."

No major data was released in Australia today. Next week, housing finance, the Reserve Bank of Australia's (RBA) board minutes for the May 1 meeting, the monthly report on new car sales and a consumer confidence reading are all scheduled for release.

In the U.K tonight, the latest 10-year bond auction will be held. Last night, as expected the Bank of England (BOE) kept rates at an all-time low of 0.5 pct. In its 318 year history, the central bank has never had interest rates as low as 0.5 pct.

In the U.S tonight, producer prices will be out for the month of April. This basically measures the change in prices paid by producers of goods in North America. If producers are paying more to manufacture goods, the increase in costs could be handed on to the end user.

Volume of shares traded came in at 1.52 billion today, worth $4.26 billion. 436 shares were up, 466 were weaker and 407 ended unchanged.

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

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 lower tonight.

Dow Futures are weaker, 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 11.30pm (AEST) and 6am (AEST).

Turning to currencies, the Australian dollar (AUD) has lost ground against the greenback and buys just US100.1 cents. This is its weakest level against the U.S dollar this year. The AUD is currently trading at £62.2 pence and €77.56 cents.

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