Australian Stock Market Report - Closing - 10/18/2011
AFTERNOON REPORT
(4.30pm AEDT)
Local stocks managed to erase all of yesterday's gains during Tuesday's session, with fear and caution again at the forefront of investors' minds. Overnight, sentiment wasn't helped by negative commentary from Germany's Finance Minister who warned it was unrealistic to expect a definitive solution to the European debt crisis at this weekend's European Union summit. Signs of slowing growth in China exacerbated the selling in afternoon trade. The All Ordinaries Index (XAO) fell 88.4pts or 2pct to 4249.5 while the S&P/ASX 200 Index (XJO) lost 88.5pts or 2.1pct to 4186.9.
Telstra (TLS) shares bucked the trend, as shareholders voted overwhelmingly in support of a plan which will see the telco hand over its copper network to the government in exchange for $11 billion. Telstra held its Annual General Meeting (AGM) today and promised a share buyback up to $6 billion, as well as reiterating its intention to pay shareholders a fully franked 28c per share dividend in 2011/12 and 2012/13. TLS shares added 0.6pct to $3.13.
Material stocks were the worst performers as Chinese GDP figures showed the nation's economy grew at a 9.1pct annual rate in the September quarter down from 9.5pct in the previous quarter and below consensus. Shares in index leader BHP Billiton (BHP) fell 3.3pct to $36.40 while Rio Tinto (RIO) was lower by 5.3pct to $66.25. Fortescue Metals Group (FMG) lost 9.2pct to $4.64.
Financial stocks were down in the order of 2pct with shares in Macquarie Group (MQG) off 2.6pct to $24.20 while the National Australia Bank (NAB) lost 2.1pct to $24.23.
Qantas (QAN) shares fell 5.2pct to $1.46 after telling the market it may be forced to ground aircraft on international routes due to engineer strikes, and could even take an A380 superjumbo out of action.
Hearing implant maker Cochlear (COH) fell 1.8pct to $53.54 after telling shareholders at its AGM its recent product recall could cost the company up to $150 million.
Minutes from the last Reserve Bank Board's October meeting were released today, suggesting that policymakers are increasingly concerned about the strength of the domestic economy. While the minutes suggest a neutral monetary policy stance - that is, rates appear set to remain on hold - the door has been left open for interest rate cuts if it is deemed necessary.
Economic data released today showed the Chinese economy grew at a 9.1pct annual rate in the September quarter (consensus 9.3pct) down from 9.5pct in the previous quarter. In constant price terms the Chinese economy grew at 2.3pct in the September quarter compared with the June quarter.
Industrial output expanded at a 13.8pct annual pace in September, up from 13.5 pct in August but above forecasts centred on 13.4 pct. Production is still well off the highs of 20.7 pct annual growth in January/February 2010.
China's urban fixed asset investment, such as spending on roads and power plants, grew at a 24.9pct annual pace in September, modestly above forecasts (24.8pct) and down from 25pct in August.
Retail sales grew at 17.7pct annual rate in September, up from 17pct in August and above forecasts, centred on 16.9pct annual growth.
The Australian dollar ended the day's trade at US102.04c, £0.6453 and €74.06c.
On the market overall, a total of 1.7 billion shares were traded, worth $4.2 billion. 264 were up, 761 were down and 295 were unchanged.
At 4.30pm AEDT on the ASX24, the futures contract was at 4185, down 99pts.
Ahead tonight, Domino's Pizza reports earnings in the US before the bell. After the bell, Apple comes out with numbers. Producer prices (business inflation) and the NAHB housing market index are slated for release.