Australian Stock Market Report – Afternoon September 1, 2014

Stock market yawning investor — An investor yawns in front of an electronic board showing stock information at a brokerage house in Hangzhou, Zhejiang province June 19, 2014. China shares had their biggest daily losses in more than seven weeks on Thursday, as the diversion of a sizable amount of capital for initial public offerings continued to weigh on markets. REUTERS/Stringer

Shares maintained modest gains

 The Australian sharemarket edged higher, making up for part of last week's 0.3 per cent slide. The All Ordinaries Index (XAO) rose by just 0.1 per cent and volume was light ahead of market closures in both the US and Canada (Labor Day) tonight. Slightly weaker than forecast readings on the health of China's manufacturing sector held back the miners this afternoon while the Australian dollar remained firm. The XAO is only 0.7 per cent away from re-visiting six-year highs.

 The price of iron ore improved for the first time in 10 days which has helped the miners rise today. BHP Billiton (BHP) and Rio Tinto (RIO) rose by 0.1 per cent and 0.27 per cent respectively. Iron ore producers Fortescue (FMG) and BC Iron (BCI) slumped as they trade ex-dividend. FMG will be paying out a 10cps dividend while BCI 15cps. Lend Lease (LLC), Toll (TOL) and Tatts (TTS) were some other big names to trade ex-dividend today.

 The major banks ended mixed despite a firmer start. Westpac (WBC) was the only improver, as it rose by 0.3 per cent. ANZ Banking Group (ANZ) ended flat, while National Bank (NAB) and Commonwealth Bank (CBA) eased slightly. The retailers were mostly stronger with Harvey Norman (HVN) a standout; rising by 3.6 per cent today and adding to Friday's 7.9 per cent surge thanks to a stronger earnings. Women's clothing retailer Noni B (NBL) is in a halt due to a "potential material transaction." Last week NBL posted a $7.8m FY14 loss.

 On the economic front locally, home prices in capital cities rose 1.1 per cent in August, with Sydney (+1.8 per cent) and Melbourne (+0.8 per cent) the standout improvers. Prices declined in Darwin and Hobart. Australia's manufacturing industry contracted for the 9th time in 10 months while petrol prices at the pump have fallen to 15-month lows; easing 4.4cpl last week.

 The start of a new month is always busy for markets with quarterly data on GDP (economic growth) out on Wednesday a highlight.

Retail spending, building approvals, international trade and tourist arrivals will also be of note locally. The FY14 profit reporting season has now come to an end and of the 141 companies which posted annual earnings, almost 70 per cent improved earningsand almost 90 per cent reported a profit. More than three quarters of businesses have lifted or maintained their dividend payments.

 Volumes were light ahead of holidays in the US and Canada which will keep both markets closed. 1.8bn shares were traded worth $3.6bn. 494 stocks rose, 504 fell and 375 were flat. Tonight manufacturing updates in Europe will be in focus together with a final quarterly GDP read in Germany which is expected to show modest 0.2 per cent contraction last quarter. Tomorrow in Australia, building approval numbers for July, a current account balance, weekly confidence and the RBA meeting will be in focus. No rate change is expected.

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