The Australian sharemarket ended higher today for the first
time this week, with the All Ordinaries index (XAO) rising by 1
pct or 42.7 pts to 4329.1. The consumer discretionary and utility
sectors lost a little ground but all other industries ended the
day higher. As long as Australian shares do not lose ground on
Friday, the XAO will likely have improved for the fourth
Despite the banks ending mostly weaker in offshore trade
overnight, Australia's financial sector was today's best
performer. Westpac (
) improved by 3.5 pct or 72 cents to $21.30, Commonwealth Bank of
) jumped by 2.41 pct or $1.20 to $51.00, ANZ Banking Group (ANZ)
gained 2.24 pct or 47 cents to $21.42 and National Australia Bank
(NAB) rose 2.02 pct or 48 cents to $24.20.
The retailers were mostly higher today with the exceptions of
discount retailer JB Hi-Fi (JBH) and department store owner, Myer
(MYR). JBH fell 2.75 pct or 33 cents to $11.69 while MYR dropped
1.47 pct or 3 cents to $2.01. David Jones (DJS) rose 1.71 pct or
4 cents to $2.38, surfwear retailer Billabong (
) gained around 1.3 pct and Westfield (
) jumped 2.7 pct.
The airlines ended mixed with Qantas Airways (QAN) finishing
flat while Virgin Australia (VAH) jumped by 3.28 pct or 1 cent to
31.5 cents. Middle Eastern carrier Etihad Airways may be
considering taking a stake in VAH. Richard Branson and Air New
Zealand are currently the airline's largest foreign owners.
The miners ended around 0.5 pct higher as a sector with BHP
) rising 0.92 pct or 34 cents to $37.42. BHP has gained by 8 pct
so far in calendar year 2012.
On the economic front today, the Australian Bureau of
Statistics (ABS) released its quarterly Consumer Price Index
(CPI) today which showed that inflation rose by a modest 0.2 pct
last quarter. This makes it more likely that the Reserve Bank of
Australia (RBA) will cut rates when it meets next in a fortnight.
For those who do not know, the RBA meets on the first Tuesday of
each month with January the exception.
Commsec Economist, Savanth Sebastian said that "As we have
suggested in a number of recent reports, inflation is well and
truly contained. The latest result removes the last standing
hurdle for the Reserve Bank to cut interest rates next month. The
sluggishness in the domestic economy has ensured that businesses
continue to absorb any increases in costs, while the strength of
the Australian dollar continues to keep imported prices low. In
addition the uncertainty and downside risks to the global economy
have resulted in subdued commodity price in recent months."
No major economic data is scheduled for release in Australia
tomorrow partly due to the Australian Day public holiday.
In the Asian region today, markets in China, Hong Kong, Taiwan
and Vietnam were all closed due to the Lunar New Year break. The
South Korean market traded for the first time this week and is up
0.27 pct or 5.33 pts to 1955.22.
Japan released its latest trade balance which came in lower
than expected and has resulted in Japan recording its first
annual trade deficit (imports were greater than exports) since
1980. India has started easing monetary policy overnight by
cutting bank reserve ratios. This basically means that Indian
banks have more money to lend out which would normally result in
added growth. India's interest rates are sitting at 8.5 pct and
have not moved since October 2011. Rates could potentially be cut
over the next few months to stimulate the Indian economy.
European shares eased from their highest levels in almost six
months overnight. A report showed that Europe's manufacturing
industry is picking up steam (particularly in Germany).
European finance minister met last night in Brussels to
discuss a wide range of issues with a particular focus on the
financial problems the Europeans must still deal with. Over 60
pct of Croatians have voted 'yes' in a referendum on whether to
join the European Union (EU).
In Europe tonight, the German ifo business climate index will
be released. This shows how confident German businesses are with
the state of their finances and the economy. The survey is quite
highly respected due to its large sample size of over 7,000
German businesses. The latest retail sales report will be
released in Italy tonight for the previous month and the market
is expecting spending to have contracted by 0.1 pct in November
2011. The World Economic Forum (WEF) kicks off in the Swiss Alps.
The forum will be attended by central bankers, prime ministers,
trade ministers and business leaders from over 90 countries.
In the U.S last night, the Federal Reserve (America's central
bank and the equivalent of Australia's Reserve Bank) kicked off
its two day meeting on interest rates. On the earnings front
Johnson & Johnson, Apple, McDonalds and Yahoo! all posted
their profit results. The standout was Apple (AAPL;us) after
posting a huge US$13 billion profit in the previous quarter
(October to December 2011). Apple sold 37 million iPhones which
was around 7 million more than expected. The company also sold
around 15.4 million iPads and iPods respectively which was around
2 million more than expected for each product. Apple also made
around US$46.3 billion worth of sales, which was an all-time
record for the electronics giant and was the first quarter
without Steve Jobs at the reigns.
Last night, the International Monetary Fund (IMF) downgraded
its forecasts for the global economy from 4 pct to 3.3 pct. The
world economy grew at 3.8 pct in 2011 and the IMF expects growth
to pick up to 3.9 pct in 2013. The organisation is usually
considered to be one of the better forecasters of global growth
(but do not always get it right).
Earlier in the day, President Obama gave his State of the
Union address. The U.S leader said he wants states to adopt laws
that make dropping out of school illegal in a bid to have
students stay in high school until they have either graduated or
turned 18. He has also called for more creative teaching and
thinks that teachers should be paid more.
In the U.S tonight, the U.S central bank will be meeting for
the second day. Expect the Federal Reserve to be a little more
upbeat than they have been recently. On the economic front, the
latest report measuring the number of homes pending sale in
December (bought but not settled homes) will be issued while
Boeing, ConocoPhillips, ETrade and Motorola will all be releasing
their fourth quarter (October to December) profit results.
The volume of shares traded came in at just 1.65 billion
today, worth $5.93 billion. 465 shares were up, 450 finished
weaker and 413 ended unchanged. Activity was higher than expected
due to option expiry yesterday.
At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24
futures contract is up 0.05 pct or 2 pts to 4241, however the
Australian market will not be open tomorrow due to Australia
Due to daylight savings, most major European markets are now
trading between 7pm (AEDT) and 3.30am (AEDT). Futures in Europe
are pointing to a better start to trade tonight.
Dow Futures are currently higher; indicating that U.S stocks
could open a touch stronger tonight. American markets open at
1.30am (AEDT). Due to the Americans going back an hour on
November 5 last year, U.S markets will be trading between 1.30am
(AEDT) and 8am (AEDT).
Turning to currencies, the Australian dollar (AUD) buys
US105.2 cents and €80.8 cents. The AUD is currently trading at
Steven Daghlian, CommSec Market Analyst
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