The Australian sharemarket improved for the first time in four
days today and has effectively wiped out most of this week's
losses. The All Ordinaries index (XAO) gained 1 pct or 42.2 pts
to 4333.2 with all sectors bar the healthcare companies ending
), the owner of Coles supermarkets, Target and Kmart released its
latest sales results which were broadly in-line with market
expectations in the previous quarter (October to December 2012).
Comparable sales at Coles supermarkets rose by 3.7 pct in the
second quarter and 4.4 pct in the first half (July to December
2011). Comparable sales do not include the impact of newly opened
stores. WES rose 0.64 pct or 19 cents to $29.90.
Media giant, Fairfax Media (FXJ) slumped by 3.68 pct or 3
cents to 78.5 cents today however rose by more than 10 pct
yesterday. The gains came after mining billionaire, Gina Rinehart
acquired close to 13 pct of the business. This has made her FXJ's
largest shareholder. Ms Rinehart is on track to become the
world's richest woman.
Commodity prices ended mostly higher overnight which helped
our miners end in the black. BHP Billiton (
) jumped 1.92 pct or 71 cents to $37.62 while the smaller RIO
) gained 2.88 pct or $1.98 to $70.72. BHP seems to have broken
through a resistance level but still fails to crack the $38
There was good and bad news on the economic front today.
Firstly, Australia posted a $1.7 billion trade surplus in
December which was around $500 million better than expected.
There was a 2 pct rise in goods exported and a more modest 1 pct
jump in goods imported.
Commsec Economist, Savanth Sebastian said that "Australia is
certainly paying its way in the world. The total trade surplus
for the 2011 calendar year was just shy of $20 billion - the
highest surplus in records going back over 40 years. But the high
Aussie dollar also means fewer tourists, more Aussies travelling
abroad and therefore a record deficit on our services account. In
the space of two years the monthly services account has gone from
near balance to a $1.1 billion shortfall."
The bad news was that property developers are remaining
hesitant to build a significant number of properties. The number
of building approvals granted by councils to developers fell by 1
pct in December, which was significantly lower than expected.
Mr Sebastian said that the "...release of the latest figures
on building approvals is certainly disappointing. Not only is the
private sector underbuilding but even the public sector has
virtually shut up shop. Just 139 public sector approvals were
committed to in December - marking the weakest reading in records
going back over 28 years. Granted the monthly numbers can be
volatile, but even if you look at the trend measure (a more
smoothed reading) public sector approvals were still at the
lowest levels on record."
In the region yesterday, China released two contradictory
economic reports on the state of their manufacturing sector. At
12.30pm (AEDT), the official government report showed that
China's manufacturing industry was improving faster than
forecast. This resulted in Chinese shares rising strongly over
the next hour. Unfortunately, at 1.30pm HSBC released its monthly
report on the manufacturing sector and showed that the industry
is still contracting. The worse than expected report dragged
shares in the world's second largest economy lower. This perhaps
raises the question to the accuracy of these reports and the
necessity of having two separate organisations issuing figures on
Today, no major economic data was scheduled for release.
Electronics giant, Sony (6758;jp) named Kazuo Hirai as the
company's new Chief Executive. Mr Hirai was previously Sony's
Vice President and the announcement comes a day ahead of its
earnings results which are expected to be weak. All listed
companies in Japan (and a number of other Asian countries) have
ticker codes (trading symbols) in numbers rather than
In Europe last night, both the U.K and the broader Eurozone
released better than expected manufacturing reports which helped
lift the major markets in the region significantly higher.
Germany's DAX index rose by 2.4 pct, France's CAC40 jumped by 2
pct and the U.K's FTSE rose by 1.92 pct.
European Union regulators however rejected the merger of the
Deutsche Boerse and the NYSE Euronext. Regulators have decided
that a merger between both organisations would give them too much
control over a number of sectors. The Deutsche Boerse (the German
stock exchange) would have had 60 pct ownership of the newly
In Europe tonight, the latest report on the state of the
British construction sector in addition to the Eurozone's PPI for
December will be issued. This measures the change in the price of
finished goods and services sold by producers. The market is
expecting a fall of 0.1 pct in the monthly reading.
In the U.S last night, the latest ADP employment report showed
that there were less jobs created in the private sector than
expected in January. The market was forecasting an additional
185,000 jobs to have been created whereas only 170,000 were
added. The American manufacturing industry expanded but not quite
as much as expected.
The price of crude oil also fell last night, which was partly
due to a report showing that there are more oil stockpiles in the
U.S than forecast.
In the U.S tonight, at around 12.30am (AEDT) we will find out
how many Americans filed to receive unemployment benefits for the
first time last week. Consensus (market expectations) is for a
fall in jobless benefits to 371,000. Federal Reserve Chairman,
Ben Bernanke testifies tonight at 2am (AEDT) on the economic
outlook in Washington DC. The testimony usually takes place in
two parts. The first section is a prepared statement while the
second is a question and answer session which can move markets on
occasion (particularly if comments surprise the market).
On the earnings front yesterday, Chrysler, Las Vegas Sands
(the casino) and Manpower (the Human Resources firm) released
their quarterly results. Tonight, Kellogg, MasterCard and Sara
Lee are all scheduled to release their profit results.
The volume of shares traded came in at 1.76 billion today,
worth $4.87 billion. 627 shares were up, 389 finished weaker and
365 ended unchanged.
At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24
futures contract is up 0.09 pct or 4 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 slightly stronger 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 (
) buys US107.3 cents and €81.4 cents. The AUD is currently
trading at £67.7 pence.
Steven Daghlian, CommSec Market Analyst
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