AFTERNOON REPORT (4.30pm AEDT)
Despite predictions of more strength on the local share market
today, it appears fear and volatility remain at play. After a
2.7pct gain yesterday, the All Ordinaries Index (XAO) fell
25.9pts or 0.6pct today to 4287.7.
Rumours that private bondholders may have to take a loss
between 50 to 60pct on Greece's debt weighed on investor
sentiment ahead of the European Union summit on
Also today, US economist Nouriel Roubini said there´s now more
than a 50pct chance that the world´s most advanced economies,
including the UK, US and Europe will fall into
Material stocks were the best performers, on the back of a
surge on the London Metals Exchange overnight. Base metals
rallied following a strong reading on the Chinese manufacturing
sector. Copper added close to 7pct while nickel was up 6.4pct.
Shares in index leader BHP Billiton (
) firmed by 0.9pct to $37.17 while Rio Tinto (
) gained 1.5pct to $66.63.
Macarthur Coal (
) directors accepted the $4.9 billion takeover offer from the US
and Belgium joint venture PEAMCoal late this afternoon.
Overnight, PEAMCoal gained the 50.01pct minimum shareholder
acceptance which was needed for the deal to take place. The
directors of Macarthur will stand down tomorrow and appoint
nominees of PEAMCoal. PEAMCoal is made up of US firm Peabody
Energy and Belgium steelmaker Arcelor Mittal. MCC shares ended
the day's trade at $16.21.
Financial stocks however lost ground. Shares in the National
Australia Bank (NAB), which reports full year earnings on
Thursday, dropped 1.1pct to $24.67. Macquarie Group (MQG) was
down 1pct to $23.10.
In the energy space, Oilsearch (OSH) shares gained 0.5pct to
$6.05 after reporting a 13pct rise in 3rd quarter revenue as
higher energy prices offset lower production costs. OSH also
announced to the market that its US$15 billion Papua New Guinea
gas export joint venture with Exxon Mobil is on track to ship its
first cargo in 2014.
In the media sector, Southern Cross Austereo (
) announced today its first quarter revenue fell 2.7pct to $176.8
million and that it expects second quarter revenue to be flat
with television markets to remain challenging, but radio to
remain stable. SXL shares rose 4.1pct to $1.145.
In the healthcare sector, shares in medical equipment
manufacturer Resmed (
) fell 13pct to $2.61 after reporting an 11pct fall in 1Q profit
to $48.35 million from $54.28 million. Resmed has blamed currency
fluctuations for the drop in earnings.
Shareholders of clothing and linen producer Pacific
Brands (PBG) today rejected the remuneration package for the
company's board. More than 52pct of voting shareholders were
against the pay increase. PBG shares fell 5.6pct to $0.595.
Also in the retail space, surf wear retailer Billabong (BBG)
said it expects better earnings in FY12, sending its share price
up 8.6pct to $3.91.
Reserve Bank Deputy Governor Ric Battellino today delivered a
speech in Sydney entitled "Economic and Financial Developments."
The Deputy Governor reiterated that the RBA sits in an enviable
position of being able to provide stimulus if required; "the
downward revisions to recent estimates of underlying inflation
and the softer global economic outlook have made the outlook for
inflation less concerning, providing scope for monetary policy to
be supportive of economic activity, if needed".
However the Deputy Governor did mention that the Australian
economy has held up relatively well given the fragile nature of
the global economy.
The speech clearly gave the impression that even the Reserve
Bank is still unsure if a rate cut is likely to take place on
Melbourne Cup day. There is still a week before the Reserve Bank
board meets and with it a whole host of market moving news to
come. The CPI data released tomorrow will provide a further
colour on the domestic inflation landscape. In addition the basis
of an interest rate cut (provided the inflation result is benign)
is squarely centred on the risks to the global economy.
The Australian dollar rallied today, ending the day's trade at
US105.64c. It was also buying £0.6459 and €75.28c.
On the market overall, a total of 1.84 billion shares were
traded, worth $4.7 billion. 396 were up, 554 were down and 406
At 4.30pm AEDT on the ASX24, the futures contract was at 4216,
Ahead tonight, data on home prices and consumer confidence are
scheduled for release in the US along with the Richmond Fed
Index. 3M and Xerox report earnings before the open.
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