Australian Stock Market Report – Afternoon 8/22/13

EVENING REPORT
(5pm AEST)

A better than expected reading on the health of China's manufacturing sector wasn't quite enough to push local shares into positive territory today. The All Ordinaries Index (XAO) slipped by 0.5 per cent, with the mining sector the biggest drag.

The monthly report on manufacturing issued by HSBC saw the reading rise from 47.7 to 50.1. Any number above 50.0 indicates improving conditions. Although this was better than expected, the industry is still essentially treading water. The result did reduce the losses however and also supported the
Australian dollar somewhat.

The US central bank is still occupying the thoughts of many investors and economists around the world. Talk of QE tapering this year has been one of the major drivers of markets around the world. Last night, there were hopes that the minutes from the last Fed meeting would provide some hints of a particular date for the start of the tapering process. However, a lack of new insights and continued uncertainty is keeping investors on edge. The Fed seems almost certain to taper at some point this year.

Despite there being no major economic news locally today, it was one of the busier days of this profit reporting season. We heard from iron ore miner Fortescue Metals (FMG), Insurance Australia Group (IAG), ASX Limited (ASX), Toll Holdings (TOL) and Origin Energy (ORG).

FMG was one of the standouts, with its shares rising by 4.1 per cent by the end of the day. Net Profit After Tax (NPAT) jumped by 12 per cent to US$1.75 billion. Iron ore shipment guidance was reaffirmed at 127-133mt, part of its US$10 billion worth of debt is expected to start being paid down and it more than double its dividend to shareholders.

ASX Limited (ASX), the operator of Australia´s main sharemarket, reported a 2.7% rise in FY13 (July 2012 - June 2013) profit to $348.2m. The result was in line with its own guidance provided in June and was driven by higher trading volumes this calendar year. Its derivatives business (ASX´s biggest) posted an 11.7% improvement in 2H13 revenue thanks to lower rates. ´Derivatives & OTC markets´ accounted for 32% of revenue.

At the close, 1.9 billion shares changed hands, worth $5.9 billion. 380 stocks improved, 524 lost ground and 305 finished unchanged.

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