Australian Stock Market Report – Afternoon 9/3/13

EVENING REPORT
(4.30pm AEST)

The Australian sharemarket edged higher, with the ASX200 Index (XJO) cracking through 5200pt mark for the first time since the middle of May. The closure of US markets overnight due to the Labor Day holiday kept investors a little quieter than usual however.

Two top shelf pieces of economic news were issued today. The Reserve Bank of Australia (RBA) decided to keep rates on hold at 2.5 per cent as expected, while retail spending was almost completely unchanged in July.

The cash rate set by the RBA is now 0.5 per cent lower than at the start of the year. The Australian dollar (AUD) shot higher to US90.5c following the central bank not stressing its easing bias for the second straight month. Another cut today was unlikely (market was pricing in just a 4 per cent chance of a drop), particularly with the upcoming election on Saturday.

There were further signs that consumers aren't interested in spending at retail outlets across Australia. Retail spending edged higher by just 0.1 per cent in July after a flat result in June. Annual spending at the retail level is up just 1.9 per cent over the year. Discretionary spending (spending on non-food goods) fell by 0.3 per cent in July, with an 8 per cent slump in department store sales to boot. The slump in spending can perhaps be attributed partly to warm winter weather (which impacts seasonal sales - blankets etc), discounting and the election. JB Hi-Fi (JBH) fell 3.1 per cent, David Jones (DJS) and Harvey Norman (HVN) fell by more than 1 per cent.

The iron ore producers were the standouts today, with Fortescue Metals (FMG) jumping by 4.85 per cent while the larger Rio Tinto (RIO) gained 3.1 per cent. Australia's biggest mining company, BHP Billiton (BHP) rose by 0.6 per cent. Billabong (BBG) put together a two-day win streak (for the first time in a month). BBG shares are up 15.3 per cent this week, however slumped 27 per cent last week.

Passenger numbers on Qantas (QAN) flights rose by 1.9 per cent in July. QAN fell by 0.72 per cent.

Volume traded was on the light side, with 1.57 billion shares changing hands worth $3.83 billion. 494 stocks improved, 438 lost ground, while 332 finished flat.

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