Australian Stock Market Report – Afternoon 7/18/13

Commsec Evening Report
(17:00 AEST)

The Bernanke speech may be in the rear view mirror now, but having navigated the main risk hurdle of the week markets have remained subdued. For much of the day the local index traded in a narrow range and volumes were equally constrained. The question to pose now: What's the next catalyst?

The main point that has been borne out again, in the last day is that the fortunes of the markets will be defined, more so than usual, by the quality of US economic news. Better readings for tier 1 readings such as GDP, employment and inflation will be significant catalysts for the markets as the Fed looks for reasons to taper bond purchases.

The local picture today was free of revelation. Business sentiment remained soft according to the NAB. Markets are accustomed to seeing confidence readings remain unresponsive to low interest rates. Markets, households and businesses have hard wired expectations for at least one more rate cut. The risk for such sentiment surveys is that the RBA will wait longer to cut rates once again given the recent fall in the Aussie dollar.

Rail operator Aurizon, formerly QR National, said it plans to cut more jobs in its drive to achieve savings of $230 million in the next two years. In the last year, the group hauled almost 194m tonnes of coal which was in line with market expectations.

Elsewhere, Wesfarmers did well to finish higher given the weaker outlook offered for contract coal prices & todays update from Woolies The retailer said its home improvement division would post an operating loss of A$139 million this year compared to an earlier forecast for a loss of A$81 million

A result that flew under the radar today was Australia's credit rating. S&P affirmed Australia's AAA/A-1+ rating with a stable outlook. Perhaps the markets nonchalance boils down to Australia having held a AAA rating from S&P since 2003 and little indication that ratings pressure is looming in the short term.

Economic news in the US tonight includes, Weekly jobless claims (, Philadelphia Federal Reserve Index, Leading indicators. Company results will include names such as Blackrock, Google, Microsoft, and Morgan Stanley.

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