Australian Stock Market Report – Afternoon 5/23/2012

MARKET CLOSE (4.30pm AEST)

The Australian sharemarket lost ground for the first time this week, with the All Ordinaries Index (XAO) down 1.3 pct or 54.7 pts to 4118.8. Last night, U.S markets finished flat while European shares managed to gain for the second consecutive day.

We should not be complaining though, as some markets have been punished to a much greater extent. Greek shares for example have slumped by 23 pct over the past three weeks alone.

All sectors finished in the red today, with only a quarter of all companies listed on the ASX gaining some ground. The miners were the worst, while the energy, financial and industrial sectors also weighed heavily on trade.

Department store owner, Myer (MYR) reported a 0.9 pct fall in its quarterly sales (13 weeks to 28 April) to $651.1 million. Its strongest performing categories/departments were men and women's wear. Online sales continue to grow at over 200 pct compared to last year. MYR downgraded its forecast for its full year profit to be no worse than 15 pct lower than 2011's profit of $162.7 million. MYR shares plummeted by 7.83 pct or 17 cents to $2.00, taking the falls for May to more than 14 pct.

Fortescue Metals (FMG) was hit hard today and fell by 5 pct or 24 cents to $4.56 (down 25 pct over the last five weeks). BHP Billiton (BHP) eased by 1.21 pct or 39 cents to $31.93 while the smaller Rio Tinto (RIO) dropped 1.07 pct or 61 cents to $56.28. The gold and oil sectors did not escape the losses.

Facebook (FB;us) shares had another tough session overnight and have now fallen by 18.5 pct since listing last Friday. This means a $10,000 investment in the FB Initial Public Offering (IPO) would now be worth just $8,150.

The results of a new survey conducted by the OECD nations have ranked Australia as the happiest industrialised country in the world. This is based on health, income and employment. Perhaps we should learn to smile despite the sharemarket weakness and live up to our new reputation?

No major economic data was issued in Australia today. Tomorrow however, the Australian Bureau of Statistics (ABS) releases its 2012 year book. This is full of interesting statistics on Australia. The last time this was published was the 2009/2010 issue.

All sharemarkets in Asia Pacific lost ground, with Japan's Nikkei 225 index slumping by 1.98 pct or 172.69 pts to 8556.6. Shares in Taiwan fell by 1.75 pct, South Korea's KOSPI dropped 1.1 pct and Hong Kong's Hang Seng dropped 1.33 pct.

Japan recorded its 13th consecutive trade deficit this morning for the month of April (imports greater than exports). The deficit was a little better than market expectations however.

In Europe tonight, the Bank of England (BOE) will issue its latest board minutes which are unlikely to reveal any new developments. The April report for retail sales will be out at 6.30pm (AEST) while industrial new orders will be issued for the month of March in the Eurozone. This measures the change in the value of new orders placed with manufactures. It is considered to be a leading indicator of production because more orders would logically lead to increased activity within the manufacturing space to fill those orders. A European Union summit will be held tonight and will be looked at closely by investors worldwide.

In the U.S, the latest new home sales will be out at 12am (AEST) with sales expected to remain subdued. A report on the change in the number of barrels of crude oil held in stock by American businesses will be released at 12.30am (AEST).

Volume of shares traded came in at 1.56 billion today, worth $4.45 billion. 321 shares were up, 636 were weaker and 322 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is up 0.3 pct or 12 pts to 4079.

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

Dow Futures are lower, indicating that U.S stocks could open weaker 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 around US1.5 cents lower than this time on Monday and buys US97.7 cents. The AUD is currently trading at £62 pence and €77.1 cents.

Australia is a commodity based economy, with commodities in general account for almost 80 pct of all our exports over the past nine months. In essence, when the going gets tough globally, there is fear of less demand for our commodities, which tends to result in a weaker AUD.

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