Australian Stock Market Report – Afternoon 6/25/13

AFTERNOON REPORT

(5pm AEST)

Regional markets remained under pressure on Tuesday as participants remain ill at ease with the conversation between Chinese lenders and the PBoC. The central bank is maintaining its hard line approach by being slow to add liquidity to its system, which in turn has seen short term interest rates remain at elevated levels. The main thrust of the PBoC stance is curtailing lending activity as a way of taking the heat out of the housing market. This initiative however is put the stability of the financial system at risk. Additionally interest rate markets globally have risen significantly in recent days as markets price in the Feds withdrawing from QE, adding new concerns to the outlook for global growth. The immediate question for local investors in the midst of present volatility is whether the 4600 level will hold in terms of the ASX2000.

· Against the current corporate trend, Goodman Fielder (GFF) issued a profit upgrade which saw the shares rise by almost 5% .The Company expects a significant improvement in its 2nd half. The more optimistic outlook can be put down to an improvement in their bakery business and better outcomes in their dairy and grocery businesses.

· Mining, energy and industrial stocks were amongst the biggest losers, although Asciano Group issued an update which saw the stock finish higher by almost 3% .The Company noted that despite the difficult environment, it still "expects a positive year broadly in line with previous guidance and market consensus expectations. Present consensus for full year EBIT is $689 mln. · Billabong (BBG) rose more than 46.15% or 6 cents. The battered surf wear retailer announced that refinancing and asset sale discussions with Altamont Capital Partners and Sycamore Partners were advancing. There were some encouraging signs that buyers were prepared to come out of hiding to secure quality stocks that had been marked down. For example Telstra (TLS) shares finished higher by 0.4%.

· US economic data releases tonight include, Durable Goods Orders, Case-Shiller home price data, Consumer Confidence, New Home Sales.

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