Australian Stock Market Report – Afternoon 9/5/13

EVENING REPORT
(5pm AEST)

The Australian sharemarket slid for the second straight day, despite the best improvements in a month in the US last night. The All Ordinaries Index (XAO) fell by 0.4 per cent, with only the defensive healthcare sector, industrials and IT industries escaping the selloff.

Things really start to heat up over the next few days, with the European Central Bank (ECB) and the Bank of England (BoE) meeting tonight. Tomorrow night, the G20 meeting kicks off while the all-important non-farm payrolls (monthly jobs report) is also issued and will be a key piece of data for the Federal Reserve's QE tapering plans. The highlight of the week will be Saturday's federal election.

On the economic front, a worse than expected $765m trade deficit was recorded in July; the worst result in six months and much weaker than the $100m trade surplus the market was forecasting. The deficit had more to do with the biggest monthly rise in imports in 18 months, rather than a deteriorating exports story. Australia's reliance on China continues, with the world's second largest economy purchasing over 32 per cent of our exports.

Almost all sectors finished in the red, with 0.5 per cent losses for the mining and financial sectors pushing the market into the red. The world's biggest miner, BHP Billiton (BHP) slipped by 0.75 per cent, while the smaller Rio Tinto (RIO) eased by 0.58 per cent. Newcrest Mining (NCM) wiped out most of yesterday's 1.75 per cent improvements.

A winner today however, was McMillan Shakespeare (MMS) following the federal opposition's costings for its plan to reverse the labor party's fringe benefits tax measures on cars. MMS rose by 4 per cent today. MMC slumped by 50 per cent in July.

At the close, 1.76 billion shares changed hands, worth $4.9 billion. 450 stocks finished higher, 481 lost some ground and 323 were unchanged.

Tonight in Europe,10-yr bond auctions take place in France and Spain. A report on monthly German factory orders will be issued, while both the European Central Bank (ECB) and the Bank of England (BoE) will be announcing interest rate decisions between 9pm (AEST) and 9.45pm (AEST). Rates are likely to remain at 0.5 per cent.

In the US, ADP employment numbers together with weekly jobless claims will be issued.

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