Australian Stock Market Report – Afternoon 7/1/13

Commsec Evening Report

(17:00 AEST)

Sellers returned from the weekend a little bolder. The result was that the market was in steady decline for much of the day. The main catalyst for the selling was the weaker manufacturing data out of China. This data point served to remind investors of the weight of economic news which will be released both locally and elsewhere over coming days, culminating with the US Jobs report on Friday evening local time. Investors will continue to calibrate their expectations of the Fed's retreat from Q.E based on the quality of US economic readings.

· Every sector measured by the ASX ended lower on Monday although financials were the main casualties. Bank stocks are in the midst of interesting cross currents at present. On the one hand they are being supported by income and dividend certainty. On the other hand, participants remain wary of foreign investors selling down their exposure as they focus on the likelihood of continued strength for the US dollar.

· Another day, another profit warning. Boart Longyear (BLY) cut their earnings guidance for the second time in as many months. Full year revenue was seen by the market to be in a range of $1.36bn-$1.56bn. EBITDA is expected to be between $176m and $211m. They now expect revenue and EBITDA to fall below these ranges due to persisting industry volatility.

· Gold stocks have been in the grips of aggressive selling in recent times although the group was spared today, thanks to a rebound in the price of the metal at weeks end. Newcrest Mining (NCM) rose by 1.3%, Kingsgate (KCN) shares rose by 5.5%

· The Aussie dollar remains under pressure having hit a 34 month low of 91.10 US cents this morning, although it found modest support through the Asian session. Buyers were somewhat encouraged after China's June manufacturing Purchasing Managers Index was in line with expectations, at a subdued 50.1. Additionally, the re-affirmation of Australia's AAA rating by the Moody's credit rating agency also gave the currency some support

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