Australian Stock Market Report - Close 16 May 2011
It was a tough start to the week today with the Australian sharemarket hitting its lowest level in just under 2 months. The ASX 200 index (XJO) fell 1.3 pct or 61.4 pts to 4650 while the broader All Ordinaries index (XAO) slumped 1.3 pct or 63.1 pts to 4724.2.
Weaker commodity prices on Friday hurt our mining and energy sectors today. The S&P/ASX 200 Energy index dropped 1.97 pct or 317.3 pts to 15758.5 today and was the worst performing market segment percentage wise. The S&P/ASX 200 Materials index also had a tough day falling 1.7 pct or 230.6 pts to 13296.9.
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One of Australia’s largest steel companies, Bluescope Steel (BSL) received a broker downgrade today. Its shares lost 4.22 pct or 6.5 cents to $1.47 at the close. The world’s largest miner, BHP Billiton (BHP) fell 1.81 pct or 80 cents to $43.52 while the third largest, RIO Tinto (RIO) dropped 1.36 pct or $1.09 to $79.06.
NSW coal miner, Whitehaven Coal (WHC) extended its falls in the second half of trade and slumped 12.44 pct or 80 cents to $5.63 after the company turned down several takeover offers.
Australia’s largest construction company, Leighton Holdings (LEI) reported a third quarter loss of $382 million. LEI is planning on raising $757 million in a share placement to improve its balance sheet. LEI rose 2.97 pct or 68 cents to $23.55 however the stock has fallen around 20 pct since the start of 2011.
Discount retailer, JB Hi-Fi (JBH) fell sharply after buying back 10.8 million shares for $173 million from investors. The buyback price was $16 which is a 7.7 pct discount to today’s closing price.
Australia’s largest airline, Qantas (QAN), fell 0.94 pct or 2 cents to $2.10 today after the company’s Chief Executive Officer (CEO) said that the airline faces a tough battle, hurt by higher jet fuel prices which have jumped around 22 pct since the calendar year kicked off. A stronger Australian dollar has been affecting tourism and foreign competition has also contributed to lower company profits.
The S&P/ASX 200 Financials index fell 1.32 pct or 58.5 pts to 4381.8, with Westpac (WBC) the worst performer after going ex-dividend today for its 76 cent a share distribution scheduled to be paid to investors in early July this year. WBC shares fell 4.3 pct or $1.02 to $22.71, ANZ Banking Group (ANZ) dropped 0.62 pct or 14 cents to $22.32, Commonwealth Bank of Australia (CBA) eased 0.52 pct or 27 cents to $51.48 while National Australia Bank (NAB) ended flat after losing only 1 cent or 0.04 pct to $26.88.
Australia’s largest telecommunications company, Telstra (TLS) rose 0.34 pct or 1 cent to $2.99 and led the S&P/ASX 200 Telecom Services sector higher. TLS is by far the largest listed company in that index.
On the economic front, the Australian Institute of Petroleum (AIP) released the latest data on petrol prices for last week. The national average petrol price at the pump fell 0.2 cents to 145.7 cents a litre last week. The wholesale price fell 3.5 cents a litre last week, so the good news for motorists is that we are expecting prices at the pump to fall by up to 4 cents a litre over the next 1-2 weeks.
The Australian Bureau of Statistics (ABS), released data on the change in the number of new loans approved in March. There was a 1.5 pct fall in the number of loans issued compared to the market expectations of around a 2 pct improvement.
Commsec Economist, Savanth Sebastian said that “The housing sector has well and truly come of the boil. Home prices have been falling, albeit modestly, while the number of new loans have fallen to the lowest level in a decade. Clearly buying interest has dried up with potential home buyers holding off on purchases in all areas. Loans for the construction of new dwellings – a key forward looking indicator for housing activity – fell by 10 per cent in the past three months and are now holding at the lowest levels in 27 months. Even the 2.4 per cent rise in loans to purchase newly established dwellings comes after a period of extended weakness. In fact over the prior three months loans fell by over 32 per cent.”
Seasonally adjusted data for the quantity of cars sold in April was released by the ABS today. The number of vehicles sold fell by 3.5 pct over the month, which was lower than market expectations.
The actual figures for car sales were released a few weeks back, however this seasonally adjusted reading removes abnormalities such as Easter and Christmas resulting in a smoother reading.
Out of Australia tomorrow, the Reserve Bank of Australia (RBA), will be releasing its monetary policy meeting minutes for its May meeting. This is scheduled for release at 11.30am (AEST) tomorrow morning.
Out of Asia today, one of the world’s largest manufacturers of electronics, Sony Corporation (6758;jp) ended flat today despite the company resuming partial operation of its Playstation network in both the U.S and European markets. Services in Asia are yet to resume. The Playstation network has been down since April 20 when up to 100 million user accounts were hacked. Sony shares have fallen around 9 pct since making the announcement to the public close to 1 month ago.
One of the world’s largest energy companies, Tokyo Electric Power (9501;jp) fell 7.28 pct or JPY33 to JPY420 today after its debt rating was cut to BBB. Japan’s largest electricity producer, which is also more commonly known as Tepco, has fallen 80 pct since March 11 when the nuclear disaster at the Fukushima power plant in Japan.
Japan also released its latest household confidence reading this afternoon. The market was expecting consumer confidence to continue to fall, however the actual reading was worse than forecast. The reading for the month of April came in at 33.4 which shows severe pessimism amongst the 6,720 Japanese households who participated in this month’s study.
There are 5 separate readings included in the data, including consumer confidence, overall livelihood, income growth, employment and a willingness to buy durable goods.
Last month, the employment rating was the worst of the 5, with a reading of 27.6. Any number below 50.0 indicates pessimism while a number above 50.0 shows that there is a level of optimism amongst the population.
One of Australia’s largest trading partners; South Korea released its latest data on import prices today. The world’s 5th largest importer of crude oil has now had its import prices rise for the 13th straight month off the back of stronger commodity prices. South Korea is not rich in natural resources, hence imports close to all its commodities.
Asian markets were not spared today’s selloff, with South Korea’s KOSPI index falling 0.75 pct or 15.9 pts to 2104.18, Japan’s Nikkei 225 index dropped 0.94 pct or 90.47 pts to 9558.3, Hong Kong’s Hang Seng slumped 1.29 pct while China’s Shanghai Composite index is currently down 0.76 pct or 21.91 pts to 2849.95.
Last Friday night, Gross Domestic Product (GDP) for both France and Germany were released for the previous quarter. The French economy grew by 1 pct, which was 0.4 pct higher than market expectations while the German economy expanded by 1.5 pct, which was 0.6 pct more than market forecasts. This was further confirmation that both nations are carrying most other European Union at the moment. In contrast, Italy’s quarterly GDP rose a very modest 0.1 pct over the same period, 0.2 pct lower than consensus.
Tonight out of Europe at around 7pm (AEST), the latest consumer inflation numbers will be released in addition to the Eurozone’s trade balance figures for March. Both of these statistics will be released by Eurostat, which is Europe’s equivalent to Australia’s ABS. Italy’s trade balance is also expected at 6pm (AEST) tonight.
Out of the U.S, Federal Reserve Chairman Ben Bernanke will be speaking at a conference in Washington DC on economic growth and the creation of jobs close to midnight
Volume of shares traded came in at 2.23 billion today, worth $4.49 billion. 275 shares were up, 869 finished weaker and 355 ended unchanged.
At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is up 0.53 pct or 25 pts to 4713.
Most major European markets trade between 5pm (AEST) and 1.30am (AEST) and futures are currently pointing to a somewhat lower start to trade tonight.
Dow Jones futures are currently pointing to a slightly weaker start to trade when American markets open at 11.30pm (AEST) tonight.
Turning to currencies, the Australian dollar is a little stronger and buys US105.6 cents, JPY85.52 and EUR74.87 cents.
The best performing stock on the market today was Advanced Magnesium (ANM), which rose 23.19 pct or 1.6 cents to 8.5 cents today. The company develops a variety of technological applications for magnesium alloys.
Have a good night.
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