The Australian sharemarket has kicked off the new trading week
higher, with the All Ordinaries Index (XAO) up 0.9 pct or 36.8
pts to 4359.4. Futures were initially pointing to a slightly
lower start to trade, however turned positive once the Greek
parliament passed new austerity measures despite a number of
violent protests in seven Greek cities.
The mining sector was a little lower on the open following
weaker commodity prices on Friday. Iron ore producer, Fortescue
Metals (FMG) rose by 4.96 pct or 26 cents to $5.50 following
M&A (Merger and Acquisition) speculation. The larger BHP
) gained 0.99 pct or 36 cents to $36.66 while RIO Tinto (
) edged higher by 0.64 pct or 45 cents to $70.43.
The financials, which make up more than 40 pct of the
Australian market rose by close to 1 pct today. ANZ Banking Group
(ANZ) jumped 1.63 pct or 35 cents to $21.77, Westpac (
) gained 1.44 pct or 30 cents to $21.15, National Australia Bank
(NAB) improved 1.39 pct or 32 cents to $23.26 and Commonwealth
Bank of Australia (
) rose by 0.82 pct or 41 cents to $50.29.
Week two of the Australian corporate earnings season has
kicked off with discount retailer, JB Hi-Fi (JBH), Singapore
Telecom (SGT) and construction company, Leighton Holdings (
) issuing either their half year or full year profit reports this
JBH reported a 9.4 pct fall in its first half profit (July to
December 2011) to $79.6 million. This was still a little better
than what the market was expecting and JBH shares rose 0.33 pct
or 4 cents to $12.03. It declared a slight increase in its next
dividend payment to eligible shareholders from $0.48 to
One of Australia's largest construction companies, LEI issued
a half year profit (July to December 2011) of $340 million which
was largely in-line with market forecasts. This was a 57 pct rise
in profit. Its revenue was better than expected and it announced
a dividend of $0.60 a share which was unchanged. LEI shares fell
1.97 pct or 47 cents to $23.38.
A number of big names will be delivering their profit results
over the week, with Thursday poised to be the busiest day of the
season to date. Tomorrow, uranium miner Paladin Energy (PDN) will
issue its numbers. On Wednesday, iron ore miner Fortescue Metals
(FMG) will release its numbers. On Thursday, AMP, ASX, Brambles,
Qantas Airways, QR National, Westfield Group and Wesfarmers will
all be delivering their earnings reports. Both surfwear retailer
Billabong and oil and gas company Santos are scheduled to issue
their reports on Friday.
On the economic front today, December's housing finance report
was out in addition to the latest credit and debit card lending
statistics for December which showed that consumers still are not
interested in increasing their spending using credit cards.
The number of new owner-occupied home loans jumped by a better
than expected 2.3 pct in December. Commsec Economist, Savanth
Sebastian said that "Property prices might be still falling but
there are signs that the housing sector is starting to turn the
corner. The latest housing finance data certainly provides a
degree of encouragement. Home loans have now increased for nine
consecutive months and as we have been saying for some time now
it does seem like it will be investor finance that does the bulk
of the heavy lifting in getting the housing sector back on its
feet. In fact investment loans surged by 7.5 per cent in December
after a 2.7 per cent rise in November."
Petrol prices fell by 2.7c to 142.4 cents a litre in the
previous week. Unfortunately, due to higher wholesale prices,
petrol prices at the pump are likely to rise over the next
Tomorrow, National Bank's business survey will be out for
January and will show us just how confident Australian businesses
currently are. On Wednesday, February's consumer sentiment
report, lending finance and new motor vehicle sales report will
be out. On Thursday, we will find out how many jobs were created
or lost in January. The market is forecasting the creation of
15,000 jobs over the month and for the unemployment rate to rise
from 5.2 pct to 5.3 pct.
In Asia today, there were signs that the Japanese economy is
slowing at a faster than expected pace. Japan's economy shrunk by
1.6 pct YoY (Year on Year). YoY means the previous quarter
(October to December 2011), compared to the corresponding period
in the previous year (October to December 2010). A strong yen and
flood damage in Thailand has impacted the world's third largest
Tomorrow, Japan's central bank will be meeting to discuss
monetary policy and make a decision on interest rates. No major
changes are expected to be announced. The Bank of Japan (its
central bank) is also going to hold a press conference.
On Wednesday, New Zealand will release its latest retail sales
report for the previous quarter (October to December 2011). The
market is expected a 1.1 pct improvement in sales. No other major
data will be released over the week in the region.
In Europe this morning, the Greek parliament passed further
austerity measures including a more than 20 pct cut in the
minimum wage and significant government job cuts. This has paved
the way for an additional €130 billion bailout package to help
pay down Greek debt. The European Finance Ministers are meeting
this Wednesday in Brussels and could approve the next package
then. Although this seems like a victory for the other 16
Eurozone nations, it is tough for the everyday Greek citizen who
is seeing certain benefits they have enjoyed for years slowly
disappear. The Greek elections will be held this April.
No major economic data or meetings are scheduled in Europe
tonight; however Governments in Italy, Germany and France are all
raising funds via the bond market.
France, Germany and Italy are all issuing their latest
quarterly GDP (Gross Domestic Product) reports from 5.30pm (AEDT)
to around 9pm (AEDT) on Wednesday. The broader Eurozone's latest
GDP reading will also be out that same night in addition to
Europe's latest trade balance (the difference between imports and
exports in December).
No major market moving economic data is scheduled for release
in the U.S tonight. Tomorrow night, North America's latest retail
sales report will be issued for the month of January. The market
is expecting a 0.6 pct lift in sales. On Wednesday night, the
Federal Reserve's latest board minutes will be released for the
January 25 meeting. On Thursday night, reports on the state of
the U.S construction sector will be released. On Friday, the
January inflation reading will be announced.
The volume of shares traded came in at 1.93 billion today,
worth $3.83 billion. 510 shares were up, 464 finished weaker and
397 ended unchanged.
At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24
futures contract is down 0.05 pct or 2 pts to 4243.
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 stronger start to trade tonight.
Dow Futures are currently slightly 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
US107.3 cents and €81 cents. The AUD is currently trading at £68
Steven Daghlian, CommSec Market Analyst
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