Australian Stock Market Report – Afternoon 8/5/13

Afternoon Market Report
(17:00 AEST)

For some time market commentators have spoken about the importance of the upcoming federal election as a market catalyst. However, on Monday it was hard to distinguish the impact of the news at the weekend that the country will go to the polls in September.

Arguably the most significant impact on the tone of trade was the bank holiday in several states which took away from volumes. Less than $3 billion in shares changed hands.

With volumes so light, attaching weight to themes seen throughout the various sectors could be seen as a flawed exercise. The main weight on the index was the financial sector with the 4 banks all ending the red. The counter intuitive outcome was the improvement seen for the Consumer Discretionary sub index in the face of the weak retail sales figures. One of the points borne out of the June figures released by the ABS was that spending in annualised terms fell from 2.3% to 1.1% in the last month, which is the weakest rate of annual growth in 39 months. Market pricing continues to point to a near certainty that the RBA will cut rates by 0.25% tomorrow.

Adding to the improvement seen in the consumer discretionary space were Billabong (BBG) shares, which rose by 3.6%. The surf wear retailer said today that consistent announcement on the 16th of July, Launa Inman had stepped down as Chief Executive Officer and as a director of Billabong effective at the close of business on Friday, 2 August. The incoming chief executive, Scott Olivet, the former head of Oakley, will not start work until a challenge of the company´s recent refinancing deal is resolved.

Ahead in Europe tonight; Interest will centre on figures measuring activity in the service sector. PMIs and the composite the Eurozone numbers will be released.Similarly in the US, service sector data will be released, with the ISM non manufacturing figures awaited. Significantly, the ISM manufacturing numbers posted a large upside surprise in July. The headline index jumped 4.5 points to 55.4, a high since June 2011. A similar result for the larger services sector would likely provide a fillip for markets.

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