Australian Stock Market Report – Afternoon 5/1/14

Afternoon report
(16:30 AEST)

It was another session where the early trend showed few signs of changing course after the opening bell sounded. With less than half an hour to trade the ASX 200 continued the plumb new lows for the session , the market finished within 10 points of the lowest levels of the day.

One of the less flattering aspects of trade was the performance of the financials. A better than expected profit result in addition to a higher dividend from the ANZ scarcely resonated with investors. The caveat being that ANZ shares have risen by almost 14 in the period since February to the end of April. The lender reported that Cash profit rose by 11% to $3.5bn compared to the markets consensus estimate of $3.44bn. A Net profit of $3.4bn represented a 15% increase on a year ago. An interim dividend of 83c was announced.

Consumer related stocks were under pressure, particularly retailers. Woolies (WOW) shares remained under pressure after yesterday's weaker than sales numbers ending down by 2.1% compared to Wesfarmers whose stock stood out with a gain in a falling market, closing with a gain of almost 0.1per cent The national conversation around the Federal Budget is doing little for the case around consumer spending in the second half of the year. One of the exceptions was Tabcorp (TAH). The wagering group defied the overall trend to rise by more than 2 per cent after yesterday's trading update which showed Tabcorp is generating strong revenue growth from fixed odds and online betting.

Elsewhere, commodity prices were generally weaker overnight and the Chinese PMI figures were underwhelming , consequently miners of most stripes were in the red. Another factor hindering the resource sector was a lower than expected profit result from the worlds largest iron ore miner. In the last day Brazil's Vale reported that net revenue fell 11% in the first quarter to $9.5 billion, while profit dropped 19% to $2.52 billion. Vale also warned of an oversupply in the iron ore market, as more production comes to market, particularly from Australia. Energy explorer Karoon Gas (KAR) was halted ahead of a "material" announcement on funding.

Today's Report from the Commission of Audit made a case for fiscal reform and proposed 64 measures it says could save $60 70bn a year by 2023 24. Most of these suggestions have been leaked over recent weeks. A suggested target of a 1% surplus in 10 years' time is not ambitious and was in line with expectations beforehand. As a consequence the release had minimal impact on the market today.