The Australian market was out of the blocks in positive
fashion this morning with stocks up by close to 0.5 pct at one
point only to fade away as the day progressed. In the final three
or so hours of trade all the gains dissipated with the All
Ordinaries Index (XAO) ending 0.3 pct or 13.7 pts lower to
4368.8. It was also another quiet session on the market today for
the second consecutive day.
Last night, both the European and American markets improved
which was a bit of surprise considering that the Spanish
government's borrowing costs are at unsustainable levels. Spain
is the Eurozone's fifth largest economy.
Investors instead focused on a report showing that Americans
are spending more at the retail level than expected. European
markets so far this month are doing it tough however. Shares in
Germany and France are down by more than 5 pct while shares in
Spain are around 10 pct lower in April.
Most sectors lost ground today, with the miners the worst hit.
The energy players, consumer staples, industrials and even the
defensive telcos all ended in the red today. The retailers
outperformed the broader market with David Jones (DJS), Harvey
Norman (HVN) and Kathmandu (KMD) all gaining by more than 1
Rio Tinto (
), Australia's second largest miner gave the market an update as
to how it has fared in the first three months of the year. The
company has increased production of key commodities such as coal
and iron over the past 12 months partly due to better weather
conditions. Investors were not impressed however, with RIO shares
down by almost 0.5 pct by close of business. Production has
fallen compared to the previous quarter (December quarter)
however. RIO shares are up approximately 8 pct since the start of
the 2012 calendar year which is a little better than the XAO.
Singlehandedly, RIO accounts for a little over 2 pct of the whole
The major banks were mixed today, with Westpac (
) and ANZ Banking Group (ANZ) falling by around 0.5 pct,
Commonwealth Bank of Australia (
) ended unchanged while National Australia Bank (NAB) gained 0.81
pct or 20 cents to $24.85.
On the economic front today, the Reserve Bank of Australia (
) issued the minutes from its latest interest rate meeting. It
seems more likely than not that rates will be cut in May by 25
bps to 4 pct for the first time this year. This will be the first
rate cut for the central bank in 2012 and would take rates to
their lowest levels since March 2010.
Commsec Economist, Savanth Sebastian said that "While the
minutes suggest that the Reserve Bank maintains an easing bias,
the final hurdle to a rate cut next month remains the quarterly
inflation data - released next Tuesday. In our view if the
inflation result comes in at or below 0.7 per cent for the March
quarter, it should provide the Reserve Bank with additional
degree of comfort and allow policy makers to cut interest rates
by 25 basis points. In fact we expect headline inflation to be of
a much more subdued nature coming in around 0.5 per cent with
underlying inflation at 0.6 per cent for the March quarter - in
short providing the Reserve Bank with the valid scope to cut
A report out this morning showed that there was a 4 pct rise
in the number of cars sold in March. Sports Utility Vehicles
(SUV)/4WDs are remaining as popular as ever. Mr Sebastian said
that "The latest set of car sales data is encouraging. In March,
car sales recorded the best monthly increase in eight months is
up 4 per cent on a year ago. Clearly the improvement in car
affordability is the clear driver. Car affordability is at the
best levels since the 1970s, and coupled with the recent rate
cuts it seems to have prompted consumers to update their
No major economic data is scheduled for release tomorrow in
Australia however BHP Billiton (
) is scheduled to issue its March quarter (January to March)
production and exploration report while Bank of Queensland (BOQ)
will announce its first half results. Austar United
Communications (AUN) is expected to release its first quarter
financial results. Last week, Foxtel received the go ahead from
the Federal Court to take over the regional subscription
In the region today, most markets lost ground, with shares in
South Korea down around 0.3 pct, stocks in Hong Kong dropped by
0.6 pct and the market in Taiwan slumped by 1.86 pct. A report in
Japan showed that household confidence in the world's third
largest economy improved slightly in March. Japan's Nikkei 225
index eased by 0.06 pct or 5.93 pts to 9464.71.
In Europe tonight, at around 7.30pm (AEST) the latest
inflation (CPI) reading will be released in both the U.K and the
Eurozone for March. The results of a survey of institutional
investors and analysts in Germany will be issued at 8pm. The
survey aims at measuring their confidence levels in April.
In the U.S tonight, around 36 major companies are scheduled to
release their latest profit results. This includes household
names such as IBM, Intel, Yahoo!, Coca-Cola and Goldman Sachs.
The forward looking March reports for building permits and
housing starts will both be out at 10.30pm (AEST) in addition to
industrial production numbers. The property numbers out tonight
give investors an idea of how many properties are expected to be
built in the future.
Volume of shares traded came in at 1.75 billion today, worth
$3.81 billion. 362 shares were up, 587 were weaker and 398 ended
At 4.30pm AEST on the Sydney Futures Exchange, the ASX24
futures contract is up 0.26 pct or 11 pts to 4302.
Due to daylight savings, most major European markets are now
trading between 5pm (AEST) and 1.30am (AEST). Futures in Europe
are pointing to a slightly weaker start to trade tonight.
Dow Futures are currently a little lower; indicating that U.S
stocks could open in the red tonight. Due to daylight savings
taking place in the second week of March in North America and the
end of daylight savings in Australia, U.S markets will now be
trading between 11.30pm (AEST) and 6am (AEST).
Turning to currencies, the Australian dollar (AUD) buys
US103.3 cents. The AUD is currently trading at £64.9 pence and
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