Australian Stock Market Report – Afternoon 6/24/13

Commsec Afternoon Report

(17:00 AEST)

Sellers returned from the weekend energised and keen to add to their work of recent weeks. Any sense that a new week might bring with it some consolidation after the falls of recent weeks was quickly dismissed. The fall for the market on Monday was its worst in 2 months taking the index back to levels seen at the start of the year.

· Chinese interest rates remain another significant matter unnerving investors. A spike in short term Chinese last week led to concerns about stability in the Chinese banking system. In the last two weeks, short term Chinese rates or SHIBOR (Shanghai Interbank Offered Rate) have risen sharply. The PBoC has chosen not to provide liquidity through its regular Open Market Operations (OMO). This has been a deliberate policy aimed at containing credit growth. Although this aggressive approach has unsettled equity markets , particularly the Shanghai Composite index which was down another 5% today

· Today's corporate news had something for everyone. AMP (AMP) issued a profit warning which saw the stock plumb an 8 month low. AMP now anticipates a first half profit of $415m-$435m. This compares to an underlying profit of $491m in in the first half of 2012 and $464m in the 2nd half. The group said that the "industry is experiencing increased pressure on insurance claims and policy lapses". Which has been a feature of the industry in recent times? AMP ended down by almost 13%. · Grocery wholesaler Metcash (MTS) had better fortunes, delivering better than expected results. Underlying full year profit of $281mln was an increase of almost 7% and better than the consensus forecast of $279m. A Final dividend of 16.5c was announced which was above the 15c that most had anticipated. MTS was up by almost 7%.

· In the Eurozone tonight the focal point will be the June reading of the German IFO survey. This is a key barometer of the business climate in Germany. In line with the lift in the German services PMI in June, the forward looking components of the IFO should show further improvement. A better result however might not be enough to temper the selling that was prevalent in Asian trade on Monday

[Kick off your trading day with our newsletter]