Australian Stock Market Report – Afternoon 5/21/13

Afternoon Market Report

(17:00 AEDT)

The selling that marked the early part of the session subsided in the early afternoon and the ASX200 was able to finish off the lows of the day. Although profit warnings from a number of companies saw investors reflect on the broader earnings picture at present.

In early trade the banks were marked down on press suggestions that a coalition victory at the next election could yield changes to the taxation treatment of negative gearing.

Consumer related stocks were also fighting headwinds on Tuesday. Furniture retailer Fantastic Holdings (FAN) was a noted decliner having issued a profit downgraded on Monday evening after the close of trade. The group expects its full year profit to be in the range of $13.5 million to $15.5 million. The downgrade comes on the heels of Wesfarmers downgrading guidance for its Target business last week and the Federal Government cutting middle class welfare in last week's budget. Most retailers felt the impact of doubtful investors Kathmandu fell 2.50 per cent, Specialty Fashion lost 1.94 per cent, Premier Investments lost 1.45 per cent & Fantastic Furniture finished down by 31%

The RBA released the minutes from the May policy setting meeting. There were no surprises in the document. Although it's reasonable to say that the lack of response on the part of business confidence to the low interest rate environment was a factor in the latest rate cut. CommSec continues to expect one more rate cut from the RBA in August.

Looking ahead, Chairman Bernanke´s testimony to the Joint Economic Committee on Thursday morning local time looms as the key catalyst of the week. The weaker Greenback seen in Asian trade today was seen as an early indication that the markets expect Mr Bernanke to stand by the Fed's existing policy in relation to Q.E rather than the tapering of asset purchases that has been so widely discussed by parties including Fed officials in recent weeks.

In Europe tonight; UK data see the release of readings on producer and consumer inflation

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