Australian Stock Market Report – Afternoon 5/2/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket rose for the third consecutive day today, with the All Ordinaries Index (XAO) edging higher by 0.2 pct or 7.5 pts to 4504.8. The XAO is one of the most popular ways to measure Aussie market performance. The index is comprised of the 500 largest listed companies locally, which make up over 95 pct of the Australian market. We hit the high of the day around the open, with shares up more 0.35 pct and shares were at their worst at midday.

Australia's third largest bank by market capitalisation (number of shares on issue multiplied by the current share price), ANZ Banking Group (ANZ) reported a 10 pct rise in first half net (October 2011 to March 31 this year) of $2.92 billion. This was largely in-line with market expectations. The bank's margins for its Australian business have been declining.

ANZ makes its monthly decision on interest rates on the second Friday of each month and passes on rate cuts on the following Friday. It was the worst performer of the major banks today and fell 0.79 pct or 19 cents to $23.80. The other three major banks eased by between 0.3 pct and 0.6 pct. Westpac (WBC), the second largest bank will issue its results tomorrow. The market is expecting a $3.1 billion profit from the bank.

One of the best performing stocks today was Stockland Group (SGP). Yesterday, the property developer said it is on track to meet its recent profit guidance for this financial year and received a broker upgrade today. SGP shares rose by a touch over 4 pct today to $3.25.

Discount retailer, JB Hi-Fi (JBH) was one of the worst performing companies today, with its share price slumping by 4.12 pct or 41 cents to $9.54. Yesterday, its shares rose strongly following the RBA's bigger than expected rate cut of 0.5 pct (50 bps). Rate cuts increase the likelihood that mortgage holders would have a few extra dollars in their back pockets to spend on retail goods. However, JBH received a broker downgrade today and a reduction in share price targets for the next 12 months.

A number of Annual General Meetings (AGMs) took place today, with Woodside Petroleum (WPL) one of the highest profile companies to meet with shareholders. Its Chief Executive, Peter Coleman today said that the oil and gas producer has held talks with a number of potential investors looking at buying Shell's 23 pct stake in WPL. Six months ago, Shell reduced its stake in the company by 10 pct to 24 pct. WPL itself is unlikely to buy back the interest, indicating that it is not the best option for the company. WPL shares rose 1.27 pct or 46 cents to $36.66.

One of the country's biggest construction companies, Leighton Holdings (LEI) was awarded a $604 million contract by the BHP Billiton Mitsubishi Alliance (BMA), for work in Central Queensland. LEI shares jumped 0.98 pct or 20 cents to $20.53.

In China yesterday, the latest official manufacturing reading was released and showed improving conditions in China's manufacturing industry. Today HSBC released its report which showed that its manufacturing sector is in a slightly better place now than a month ago.

Almost all markets in Asia were closed yesterday due to the Labour Day public holiday, however were open for trade today. Shares in Taiwan led the charge and gained by 2.33 pct or 175.09 pts to 7676.81. China's Shanghai Composite Index ended 1.76 pct higher while Hong Kong's Hang Seng also performed impressively after gaining 1.27 pct. Shares in Japan only edged higher by a modest 0.31 pct.

Tonight in Europe, the Eurozone's latest jobless rate will be announced and is expected to rise from 10.8 pct to 10.9 pct. Just five years ago, the jobless rate in Europe was sitting at just 7.2 pct (close to 4 pct lower than today). The European Finance Ministers will be meeting for the ECOFIN meetings tonight (The Economic and Financial Affairs Council). These meetings are usually held in Brussels and attended by representatives from all 27 European Union (EU) member states.

In the U.S tonight, a report on the change in private sector employment will be issued at 10.15pm (AEST). The more important official government figures will be released on Friday night and tend to have a more significant impact on global markets. The latest report on the number of factory orders last month will also be out at midnight and is expected to show a 1.5 pct decline in orders.

Volume of shares traded came in at 2.16 billion today, worth $4.74 billion. 514 shares were up, 498 were weaker and 406 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is down 0.11 pct or 5 pts to 4424.

Due to daylight savings, most major European markets are now trading between 5pm (AEST) and 1.30am (AEST). Futures in the U.K are pointing to a slightly stronger start to trade tonight.

Dow Futures are currently a touch 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) is higher against most currencies and buys US103.3 cents. The AUD is currently trading at £63.8 pence and €78.4 cents.

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