Australian Stock Market Report – Afternoon 8/27/13

EVENING REPORT
(4.30pm AEST)

The All Ordinaries Index (XAO) eased modestly after a slightly improvement on Monday. The 5100pt mark remains key for the ASX200; a level we've traded above for three straight sessions. The Australian market hasn't traded above the 5100 in a decisive manner however since June 2008. Weakness from the mining, energy, industrials and telcos kept the market a touch lower. Improvements from three of the four major banks helped to limit the losses; however wasn't enough to push the broader XAO higher.

US and European markets lost ground overnight, however both regions have many of their markets close to all-time highs. In contrast, local shares are still around 25 per cent off the highs reached in October 2007.

There are currently a number of concerns for global markets. Firstly, the tensions in the Middle East are beginning to impact markets. Secondly, the worse than expected US economic data out since Friday last week (housing data and durable goods worse than forecast). This is keeping economists and analysts guessing on the likely date of QE tapering over the next few months. Political stability in Italy is another talking point. Berlusconi's party is threatening to no longer support the governing coalition if the controversial figure is ousted from the Senate due to tax fraud.

Week four of the profit reporting season is continuing, with Billabong (BBG) and Flight Centre (FLT) two of the bigger names to have issued numbers. Struggling surfwear retailer, BBG announced a worse than expected FY13 loss of $860m. The closure of 158 stores was part of the reason for a 13.5% slide in sales to $1.34bn. $867.2m worth of write-downs was a drag. BBG shares fell by 7.96% today.

Travel agent, Flight Centre (FLT) posted a 23% rise in FY13 profit to $246.1m. Its positive outlook for 2013-2014 helped pushed shares 8.2 per cent higher. FLT is expecting an 8-12 per cent rise in profit this year to between $370m and $385m.Its focus on cost cutting has helped its margins.

Boral, QBE insurance, iiNet and Mortgage Choice all slipped into the red today following trading ex-dividend.

By the close, 1.99 billion shares changed hands, worth $4.43 billion. 437 stocks improved, 505 ended in the red and 334 finished unchanged.

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