Australian Stock Market Report-CLOSING (7/19/2011)
AFTERNOON REPORT
(4.30pm AEST)
The local share market once again finished flat, with the All Ordinaries Index (XAO) virtually unchanged at 4539.4. The S&P/ASX 200 Index (XJO) closed down 3.9pts to 4468.1.
Financial stocks were generally weaker, investors remaining jittery about the overall health of US and European economies ahead of the August 2 deadline for the US debt ceiling and on worries Eurozone ministers may not agree on a second bailout package for Greece when they meet on Thursday. Shares in the Commonwealth Bank (CBA) shed 0.7pct to $48.55 while Macquarie Group (MQG) was down 1.9pct to $28.07.
Resource stocks were mixed. The gold price hit a fresh record high of US$1604.95 an ounce in Asian trade, sending Newcrest Mining (NCM) up 0.8pct to $40.73 however heavyweights BHP Billiton (BHP) and Rio Tinto (RIO) closed in the red. BHP shares finished at $42.62 while RIO was at $81.33, down 0.3pct.
Energy players were among the best performers, with the sector up 1pct. Woodside Petroleum (WPL) added 1.8pct to $38.92 after reporting a 17pct rise in 2Q 2011 revenue to $1.19 billion. Production for the same period fell 7pct.
NewsCorp (NWS) shares bounced back, ahead of a UK Parliamentary Inquiry into the scandal tonight where CEO Rupert Murdoch and his son James will testify. A Bloomberg report today indicated that independent News Corporation board members are considering replacing Rupert Murdoch with Chief Operating Office Chase Carey. The move would see 80 year old Murdoch remain as the company's Chairman. Chase Carey is a former CEO of DirecTV and is seen as positive by the markets, as he has always been pro share buy-backs. NWS shares rose 2.4pct today to $14.50.
Gaming company TabCorp (TAH) today retained the licence for wagering in Victoria. The new licence comes into effect next year and is current for 12 years. Tabcorp has had a monopoly on off-course betting in Victoria for 50 years and had been competing against British betting giant Ladbrokes and Australian firm Tatts Group (TTS) for the licence. TAH shares rose 5.2pct today to $3.26 while TTS added 0.4pct to $2.33.
Qantas shares (QAN) closed steady at $1.825 as pilots prepare for industrial action. Virgin Blue Australia (VBA) rose 1.7pct to $0.295.
Minutes from the Reserve Bank Board's July meeting were released today and showed the central bank is firmly on the interest rate sidelines. The decision to leave interest rates on hold in July was due to an array of domestic and international factors. The lack of momentum in the domestic economy was further compounded by the uncertainty surrounding the European sovereign debt issues.
Other economic data released today, showed imports rose by 3pct in seasonally adjusted terms in June. The rise in imports was largely due to a pick up in capital good imports and fuels. Consumption good imports (less cars) were down by 4.1pct on a year ago, marking the biggest fall in 14 months.
CommSec believes that today's data highlights the fact the next move in rates will most likely be up. "But not until November at the earliest," said CommSec Economist Savanth Sebastian. "A rate hike is by no means assured. For the Reserve Bank to start lifting rates again, it will need to see a substantial improvement in the business environment, and be of the belief that underlying inflation is again rising to the extent that its three percent ceiling will be breached, or likely to be breached. And clearly that's not the view at present."
The Australian dollar ended the day's trade at US106.31c, £0.6617 and €75.36c.
On the market overall, a total of 2.12 billion shares were traded, worth $4.54 billion. 481 were up, 548 were down and 387 were unchanged.
At 4.30pm AEST on the ASX24, the futures contract was at 4440, down 7pts.
Ahead tonight, Dow components Coca-Cola, Johnson & Johnson and the Bank of America report quarterly earnings before the bell. Goldman Sachs is also tipped to release results. In economic data, June housing starts and building permits are released.
News Corporation CEO Rupert Murdoch and his son James face a UK Parliamentary Inquiry into the News of the World phone hacking scandal.
(From Juliette Saly, CommSec Market Analyst)