Australian Stock Market Report – Afternoon 5/8/14

Afternoon Report
(16:30 AEST)

The ASX 200 ended comfortably higher on Thursday although in broad terms it remained in the holding pattern that has been occupied in recent weeks. More so than recent years, the looming Federal budget hangs above the market as a hurdle. The bottom line will be to assess the extent to which spending is cut and the degree to which households will be impacted by the curtailing of payments. Most controversial of all is the possibility of a deficit levy.

The ASX 200 spent the entire session in positive territory. The index finished about 12 points away from the best levels of the day when it was up by 48 points. Volumes remained lighter than average for most of the day. Consumer discretionary and Technology stocks were the only groups to end in negative territory. The feature of the session was the better than expected employment report. The ABS reported that employment rose by 14,200 in April after a revised 22,000 lift in jobs in March, which was initially reported as an 18,100 increase. Full-time employment rose by 14,300 in April after falling by 22,800 in March. Part-time jobs were unchanged after rising by 44,600 in March. A total of 106,000 new jobs have been created in the first four months of 2014, the best start to a calendar year in six years. This added weight to the case made by some that the unemployment rate may have peaked, increasing the possibility of a rate rise at the end of the year.

In company news, Boart Longyear (BLY) shares fell 20 per cent after the company´s rig utilisation rate and revenue fell in its first quarter. Rig utilisation fell to 32 per cent, from 39 per cent in the same period last year. Revenue fell to $US197 million in the three months to the end of March compared to $US370.2 million in the first quarter of last year.

The Australian Competition and Consumer Commission (ACCC) announced that it will appeal against the size of the penalties incurred by Flight Centre (FLT). The group was fined $11 million by the Federal Court in March, after finding that Flight Centre had threatened to stop selling flights on several airlines in order to offer the lowest fares. FLT shares ended down by 1.8 per cent.

In other economic news, Chinese trade figures came in well ahead of expectations. Having being affected by the Lunar Holiday over the first three months of the year, Chinese businesses are cranking up activity once again and more importantly back to back trade surpluses have now been recorded. This was another factor supporting the Aussie dollar over the session.