Australian Stock Market Report – Afternoon 6/7/13

Afternoon Market Report

(17:00 AEST)

Another week has passed where sellers have continued to define the market atmosphere. The ASX200 has lost the most part of 10% since the early part of May. The defining aspect of market volatility during this period has been the open debate moderated by the US Fed on the winding back of quantitative easing. Adding another dimension the selling in local terms has been the pace of profit downgrades from corporates in recent week. This last point talks to the recent flow of economic news which has highlighted the slowing of the real economy.

Whilst the trading week may have formally ended for local participants, investors globally will be on alert Friday evening Sydney time for the release of the US employment data or the Non-Farm Payrolls report. It will be a difficult set of numbers to digest for investors. One the one hand stronger employment numbers will inflame market concerns that the Fed will expedite its paring back of QE. Weaker numbers will simply talk to the markets concerns that the global economy appears to be entering a synchronised slow down. Earlier in the week, the US ISM Services Index (a national survey of activity in the services sector) was a little better than expected. However looking at the sub-indices, the measure of employment fell to just above 50, indicating that employment in the sector which makes up about two thirds of the US economy is a hairs breadth away from contracting. This is one of the reasons why the markets have been anxious in anticipating Friday's release of the Non-Farm Payrolls data...

Gold miner Newcrest continued to dominate headlines on Friday. A free falling gold price has prompted the group to undertake a review of its business. The result has been the potential of up to $6billion in write-downs. Additionally Newcrest Mining will slash around 100 jobs, bringing the recent total to 250 and close its Brisbane office. The shares end trade 7.5% lower. · On a similar theme Lynas Corp (LYC) issued an operations update. The miner of rare earth metals announced cost cut reflecting falls in Rare Earth prices. The group recently began production at its Malaysian facility although forecast lower operating levels due to weaker demand...LYC shares rose against the trend on Friday closing up 1.9%.

[Kick off your trading day with our newsletter]