Australian Stock Market Report - Closing 10/31/2011

MARKET CLOSE (4.30pm AEDT)

The All Ordinaries index (XAO) fell by 1.2 pct or 50.9 pts to 4360.5. Almost all regions of the market lost ground today with the miners the worst performers in percentage terms.

It is important to keep in mind that last week markets globally skyrocketed following the announcement of a number of concrete steps to assist the struggling European economy. The XAO rose by 4.95 pct, stocks in the U.S jumped 3.58 pct while Germany's DAX index gained by 6.28 pct.

Today, the S&P/ASX 200 Materials index fell 2.1 pct or 251.4 pts to 11697 with BHP Billiton (BHP) dropping 2.3 pct or 89 cents to $37.80 while its competitor RIO Tinto (RIO) fell 1.44 pct or $1.01 to $69.21.

The major banks also extended their losses on the close with the S&P/ASX 200 Financials index dropping 1.36 pct or 56.8 pts to 4134.3. Westpac (WBC) fell 1.59 pct or 36 cents to $22.32, ANZ Banking Group (ANZ) dropped 1.81 pct or 40 cents to $21.68, Commonwealth Bank of Australia (CBA) lost 1.38 pct or 69 cents to $49.27 while National Australia Bank (NAB) ended 1.12 pct or 29 cents weaker to $25.70.

Both ANZ and WBC are scheduled to post their full year profit results in the second half of the week.

It was not all bad news today however, with Qantas (QAN) rising 4.37 pct or 6.75 cents to $1.61 while its competitor Virgin Australia (VBA) rose 4.17 pct or 1.5 cents to 37.5 cents. The improvements came after the Australian Industrial Regulator ordered the termination of strike action against QAN. This has opened the way for the resumption of QAN flights. No strike action is expected over the next 21 days. The strikes have cost the airline around $15 million in lost revenue a week and have affected 80,000 passengers.

Around 15 Australian companies held Annual General Meetings (AGMs) today.

Tomorrow will be a big day for mortgage holders as the Reserve Bank of Australia (RBA) is meeting to make a decision on interest rates. Rates have remained on hold at 4.75 pct since November last year. The market seems split when it comes to the possibility of a rate cut tomorrow.

Back in 2008 following the collapse of investment bank Lehman Brothers, the RBA did not wait long to cut rates. In September 2008 the official interest rate was at 7 pct and was cut aggressively to a low of 3 pct by March 2009.

If things worsen in Europe, the RBA remains in a favourable position (compared to its global peers) to cut rates and stimulate the economy. The European Central Bank (ECB) has rates at just 1.5 pct, the Bank of England (the U.K's central bank) has rates at 0.5 pct while both Japan and the U.S have rates around 0 pct.

No major data is scheduled for release in the U.S tonight however seven large companies belonging to the S&P 500 will release their third quarter (July to September) profit results. Canada will be releasing its latest monthly growth figures at around 10.30pm (AEDT).

The volume of shares traded came in at 1.8 billion today, worth $4.47 billion. 425 shares were up, 567 finished weaker and 373 ended unchanged.

At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is down 0.02 pct or 1 pt to 4348.

Most major European markets trade between 6pm (AEDT) and 2.30am (AEDT). Futures in Europe are pointing to a weaker start to trade tonight.
Dow Jones futures are down 0.81 pct or 98 pts to 12070, indicating that U.S shares will likely kick off the session in negative territory when American markets open at 12.30pm (AEDT).

Turning to currencies, the Australian dollar (AUD) has given back as much as US2 cents against the greenback in trade today and currently buys US105.4 cents. This came after the Japanese government decided to intervene with its currency and take steps to weaken the Japanese yen. The yen is considered to be a safe haven currency and tends to rise when the global market remains uncertain. A stronger yen makes Japanese exports less enticing to offshore investors.

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