Australian Stock Market Report – Afternoon 7/5/2012

AFTERNOON REPORT
(5pm AEST)

The local share market closed flat today, ahead of a key European Central Bank meeting where it's widely tipped the ECB will cut interest rates in the Eurozone to a record low of 0.75pct. Wall Street was closed overnight for Independence Day while there was a lack of market moving economic data which also affected guidance. On low volumes, the All Ordinaries Index (XAO) closed down 3.9pts to 4209.9.

In breaking news, Australia's largest woman, Gina Rinehart and her company Hancock Prospecting, have sold a 3.7pct stake in Fairfax Limited (FXJ) right on close. The transaction, worth $50.2 million, reduces Hancock Prospecting's stake in the company to just below 15pct. The company has also moved to send a strong message by publicly criticising the publisher of the Sydney Morning Herald and Australian Financial Review for its poor performance.

´´We continue to monitor the performance of our investment in Fairfax noting that the shares are trading at record or near record lows, which is an independent assessment of the Chairman´s performance,´´ said Hancock in a statement.

By selling the block of share, Ms Rinehart has moved to put more pressure on Fairfax Chairman Roger Corbett who she is locked in dispute with over his opposition to her gaining three board seats. FXJ shares today closed at $0.585, up 0.9pct.

Financial stocks were mixed. Shares in Westpac (WBC) rose 1pct to $21.75 while Macquarie Group (MQG) was lower by 0.6pct to $26.32.

Commodities were sold off on the futures markets, impacting energy stocks. The energy sector closed down 0.6pct with Oilsearch (OSH) weaker by 1.6pct to $6.67.

One of the best performers on the market was Flight Centre (FLT).The travel agent has defied the downturn in consumer spending, by upgrading its full year profit guidance. FLT now expected FY profit to June 30 t come in between $280-$295 million, up 18pct on last year's result. FLT will also move to increase its workforce by 8-10pct, through hiring 1000 new sales consultants. FLT shares closed pup 6.3pct to $20.49 after hitting an earlier high of $20.96.

Elsewhere, Austock Group (ACK) was placed in a trading halt pending an announcement about the potential sale of its property funds management business. The move follows an Australian Financial Review report that Austock was in talks with Folkestone about a joint venture to buy its $555 million property funds platform. ACK last traded at $0.125.

In economic news today, Australia recorded its fifth straight trade deficit of $285 million in May following a downwardly revised $26 million deficit in April (previously a $203 million deficit). Imports of capital goods rose by 3pct in May to be up 39.9pct on a year ago, marking the strongest annual growth rate in almost 10 years.

The Australian dollar ended the day's trade at US102.65c, £0.6583 and €81.96c.

On the market overall, a total of 1.1 billion shares changed hands, worth $3 billion. 442 were up, 416 were up and 345 were down.

At 5pm AEST on the ASX24, the futures contract was unchanged at 4131.

Wall Street resumes trade tonight with the ISM non-manufacturing survey on the economic agenda.

[Kick off your trading day with our newsletter]