Australian Stock Market Report – Midday November 3, 2014

Stocks Fall as Nasdaq Slides; Dollar Eases on Jobs Data Reuters

ASX starts the week in neutral

 The Local share market has started the new trading week in a lethargic fashion with buyers and sellers scarcely making an impression one way or the other in early trade on Monday. The lack of commitment from local participants came despite resounding gains in the US at the end of last week. US share markets rose sharply on Friday with the Dow Jones and S&P 500 indexes at record highs as investors drew comfort from the Bank of Japan's move to purchase more assets. The Dow Jones rose by 195 points or 1.1% with the S&P 500 index up by 1.2% while the Nasdaq rose by 64.6 points or 1.4%. Over the week the Dow Jones rose by 3.4%, the S&P 500 index was up by 2.7% and the Nasdaq rose by 3.3%.

 At the best levels of the session in early trade on Monday morning the ASX 200 was up by almost 10 points. When sellers chanced their arm the index was 18 points below the closing level of last Friday. Volumes were on the lighter side of the equation with less than $1 billion in shares having changed hands in the first hour of trade. There was ample company and economic news on offer for participants to take in over the morning.

 Sellers took a heavy hand to Woolworths (WOW) following the release of the grocers quarterly sales numbers. Woolies reported that total sales in the September quarter rose by 3% to $16.15 billion. Total Australian food and liquor sales rose by 3.9 per cent to just over $11 billion in the face of weaker trading conditions for most of the quarter. Comparable sales, which strip out the effects of store openings and closures, were well below the market's expectations rising by 2.1% compared to a 2.5% increase in the previous quarter. Petrol sales fell 4.5% to $1.8 billion reflecting a directive given to Woolworths by the ACCC to limit the discounts it offered to customers. WOW shares were down by more than 4% at $34.42.

 On the positive side of the ledger Brambles (BXB) upgraded its full year earnings guidance. The pallet maker revised annual earnings guidance higher reflecting the contribution of a recent acquisition. BXB acquired container maker Ferguson Group in September, paying US$515 million for the group which services the oil and gas sector. As a result Brambles expects to post an underlying profit for the full year in 2015 of between US$1.06 billion and US$1.09 billion. Based on foreign exchange rates at June 30 the forecast represents earnings growth of between 9 and 12%. These figures compare to estimates in August when the group said that it expected full year earnings of between US$1.03 billion and US$1.06 billion. BXB shares were up by 1.3% at $9.65

 In the banking sector Westpac announced a record full year cash profit of $7.63 billion a rise of 8%. The lenders net profit rose 12 per cent to a better than expected $7.56 billion. Bad debts or impairments were a feature, falling by 23 % or $197 million lower. Revenue in the same period was $19.94 billion, a 7 per cent lift on the previous year. WBC will pay a fully franked final dividend of 92c to shareholders on the register at November 12. Combined with the interim dividend, Westpac's total distribution for the year comes to $1.82, a 5 per cent lift on the previous year. Westpac shares were 0.6 % lower at $34.55.

 The Aussie dollar fell following weaker data on building approvals. The Australian Bureau of Statistics data showed the number of buildings approved fell a seasonally adjusted 11 per cent to 15,004 in the month which was below expectations the news sent the local unit to 87.2 US cents.

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