Australian Stock Market Report –Afternoon November 19, 2014

IN PHOTO: Office workers are reflected as they walk past the Australian Securities Exchange building in central Sydney April 8, 2011. Singapore Exchange Ltd has terminated its $8 billion bid for Australia's ASX Ltd after the Australian government formally rejected the offer on national interest grounds and said changes to the country's financial systems were needed before the bourse could be bought by foreigners. REUTERS/Daniel Munoz

ASX 200 breaches 5400 support level

 The ASX 200 continued to lose ground over the course of the afternoon. While the market finished around session lows, the more discouraging aspect of the session was the index breaking down through the 5400 level. In the last day the market had shown some signs of support around this key support level, although today's close indicated that the sellers had won out. The more important measure will be whether the index closes above 5400 on a weekly closing basis.

 Sector performances remained similar to the pattern established in the morning particularly in the commodity space. Energy stocks remained in reverse as the weeks old theme around OPEC remains front of mind for investors. Crude oil benchmarks remain at multi-year lows on concerns that OPEC will not cut enough crude oil supply to balance crude oil markets. OPEC accounts for around 40% of the world's crude oil supply. The cartel is meeting on 27 November to decide the group's crude oil output target in 2015. Woodside Petroleum shares ended 1% lower, Oil search ended flat.

 Energy consumers however are enjoying some improved sentiment as lower fuel prices appear close at hand, to wit Qantas (QAN). The carrier recently highlighted $20m in anticipated price savings on fuel reflecting the recent fall in fuel prices. The benefits of the fuel price falls have been evident in the November operating figures. Each $1 movement in a barrel of oil translates to about $32m movement in Qantas' fuel bill across full year. Elsewhere, at its AGM Virgin Australia (VAH) said it expects to post an underlying profit in the second quarter of this financial year. This compares to the $355.6 million loss posted in 2014 reflecting a price war with Qantas. VAH outlined plans to cut costs by $1 billion over the next three years pointing to signs conditions are moderating in the domestic aviation market. VAH shares ended with a 1.25% loss, while QAN rose more than 1%.

 The world's largest supplier of explosives and blasting technology, Orica (ORI), announced a 1.7% rise in full year net profit after tax to $602.5M while earnings before interest and tax fell 4%, at the same time highlighting that it doesn't expect a significant improvement in resources markets in the current fiscal year. Significantly, ORI outlined the planned sale of its chemicals business to the Blackstone Group who paid $750 million for the operation that makes broad number of products ranging from dyes to fertilizers. The sale price for the business was in the lower part of a price range forecast by analysts who had forecast a sale price in the range of $650 million to $1 billion. ORI shares ended the session with a loss of more than 3%.

[Kick off your trading day with our newsletter]