Australian Stock Market Report – Afternoon 8/28/2012

AFTERNOON REPORT
(5pm AEST)

Australian stocks closed just shy of their opening highs today, with defensive stocks leading the gains following a mixed finish on global share markets. The All Ordinaries Index (XAO) finished higher by 14.1pts or 0.3pct to 4387, after hitting an intra-day high of 4391.9pts.

London was closed for a Bank holiday overnight, meaning there was no direction for our miners today with the base metals market not trading. US stocks closed mixed, in the absence of major economic or corporate news. However shares in Apple rose by 1.9pct, hitting a record US$680.87 a share at one point, after winning a patent dispute with Samsung.

Locally, financial stocks did generally well, with the exception of the Commonwealth Bank (CBA). CBA shares fell 0.4pct to $54.41 while shares in Westpac (WBC) were up 0.8pct by close to $24.87 and the National Australia Bank (NAB) added 1pct to $25.25. The ANZ (ANZ) added 1pct to $24.94 and Macquarie Group (MQG) firmed by 1.7pct to $26.71.

Mining stocks were generally lower however with Fortescue Metals Group (FMG) falling 2.5pct to $3.90 as the iron ore price fell below US$100 per metric tonne. Rio Tinto (RIO) lost 0.7pct to $51.75 while index leader BHP Billiton (BHP) was slightly higher at $33.10.

Among the companies reporting today; Australia´s largest travel agent Flight Centre (FLT) reported a $200.1 million net profit for the 2012 financial year which was largely in line with market expectations. This was the first time in its history that profit topped $200m. All 10 of its markets (countries) were profitable for the second straight year and its shop numbers grew by 5pct to 2362. FLT said the business continues to benefit from its scale and diversity. Looking ahead, FLT said it´s creating a new category of travel agency; what it calls a blended travel network, which is a mix between being purely web-based & having a physical presence in the form of shops (eg. clients could start a booking in store and complete it at home). It expects profit to rise this year, is prepared for ongoing economic volatility, is planning on expanding its workforce by adding 1000 new sales staff and is on track to open its 2,500th shop within the next 12 months. FLT declared a 71 cent per share dividend, to be paid to eligible shareholders on 12 October 2012. Its shares are up by 47pct since the start of this calendar year. FLT today added 0.4pct to $23.70.

Meanwhile, discount carrier Virgin Australia (VAH) reported net profit for the 12 months to June 30 2012 came in at $22.8 million, a sharp turnaround from a $67.8 million loss in the prior corresponding period. Revenue grew 19.8pct to $3.9 billion. Virgin Australia chief executive John Borghetti said the
airline´s successful targeting of corporate and government
travellers, who tend to pay higher fares and make up 20pct of total revenue, was a key factor in the improved result. However, he said the uncertain economic environment meant it was not possible to offer earnings guidance for the 2012/13 financial year. The lack of guidance disappointed investors, with VAH shares ending steady at $0.48. Rival Qantas (QAN) closed higher by 0.9pct to $1.19.

Poker machine supplier Aristocrat Leisure (ALL) reported a better than expected 40pct rise in first half net profit to $34.7 million. The result for the half year ended on June 30 beat the forecast the company gave in July of a net profit of between $30 million and $33 million. ALL shares soared by 7.4pct today to $2.76. ALL will pay an interim dividend of 4c per share.

The Housing Industry Association today reported new home sales fell by 5.6pct in July. While only the first decline in four months, the decline wiped out all the gains over the period. It was also the second lowest monthly total of new homes sales in 11 years, behind the March 2012 result.

"After a few glimmers of light, the housing construction market is back in the doldrums," said CommSec Chief Economist Craig James of the data. "Newly-erected homes aren't selling, reducing the requirement for builders to start work on new projects. The Reserve Bank Governor has expressed surprise about the lack of home construction, but there still aren't signs of an upturn."

The Australian dollar ended the day's trade weaker against the greenback, buying US103.69c. It was also worth Australian dollar ended the day's trade weaker against the greenback, buying US103.69c. It was also worth €83.05 and £0.6569.

On the market overall, a total of 1.64 billion shares were traded, worth $3.65 billion. 439 were up, 503 were down and 350 were unchanged.

Ahead tonight, consumer confidence data and the S&P/Case Shiller home price index are issued.

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