The Australian sharemarket ended a little lower today for the
second time this week. The All Ordinaries Index (XAO) fell 0.3
pct or 11.6 pts to 4433.4 with almost all sectors losing ground.
The market has remained largely unchanged over the shortened
trading week (ANZAC Day public holiday on Wednesday).
Earlier in the week, Treasurer Wayne Swan returned from a trip
to Washington and agreed to contribute $7 billion to the
International Monetary Fund's (
) $430 billion additional pool of funds.
Seven West Media (
), the owner of the Seven Network has struggled and pulled back
by 24.2 pct for the week. This came after it warned the market
that its advertising
is doing worse than forecast.
), the owner of Coles, Kmart,
and Bunnings has had a good week with its shares up 2.3 pct this
week. The diversified business gave the market a relatively well
received sales update yesterday.
Last night, both U.S and European sharemarkets improved for
the third straight day, which helped our market kick off the
session in the black. The gains started to fizzle away after just
an hour of trade. Macquarie Group (MQG), Australia's largest
investment bank posted a $730 million profit for the year, with
weaker commissions and trading income weighing on the result.
Profit was still broadly in-line with expectations which helped
its shares rise 2.95 pct or 84 cents to $29.27.
Discount retailer, JB Hi-Fi (JBH) said it expects to meet its
sales targets for the year however due to heavy discounting (to
attract customers), profit is likely to be lower than expected.
JBH shares fell 6.26 pct or 67 cents to $10.04 and wiped out its
weekly gains completely.
The four major banks fell by between 0.1 pct to 0.79 pct today
with National Australia Bank (NAB) the worst performer. The
miners also finished in the red, with Rio Tinto (
) down 1.1 pct or 73 cents to $65.43, while both BHP Billiton (
) and Fortescue Metals Group (FMG) eased by around 0.7 pct.
This week, both business and consumer inflation reports were
released and came in significantly lower than expected. This
makes it almost certain that the RBA will cut rates for the first
time this year on Tuesday by 0.25 pct. The market is factoring in
a 30 pct chance that rates will be cut by a more significant 0.5
There was no major economic data out in Australia; however the
economic calendar next week will be relatively full. On Monday,
the monthly inflation gauge, private sector credit and the latest
home price report will be issued. On Tuesday, an update on the
manufacturing industry will be out in addition to the Reserve
Bank's decision on interest rates. The quarterly economic
assessment will be released in the form of a Statement on
Monetary Policy at the end of the week.
In the region today, most markets lost ground, with shares in
New Zealand and South Korea the exceptions. It was the biggest
day of the week in Japan and one of the busiest of the month. The
Bank of Japan (BOJ) announced additional quantitative easing
measures today (printing additional cash to buy assets). Japan's
unemployment rate remained steady at 4.5 pct, retail sales
improved by a slightly lower than expected 10.3 pct for the year,
inflation remains non-existant and the manufacturing industry is
showing some modest signs of improvement. Japan's Nikkei 225
Index is down 0.4 pct.
In Europe last night, Spain's credit rating was cut for the
second time this year by Standard & Poor's (S&P). The
ratings agency said that it is becoming more likely the Spanish
government will need to provide further support for Spanish
banks. Back in January, S&P downgraded nine Eurozone nations
including France, Austria and Spain. Tonight will be a quiet
evening for economic news in Europe.
In the U.S last night, markets reacted well to a much better
than expected 4.1 pct rise in pending home sales (which is a
forward looking indicator). This was the best reading since April
2010. The number of Americans filing for unemployment benefits
for the first time last week improved slightly, but not by as
much as expected.
On the earnings front, most companies continued to outperform
their own guidance however a number of businesses struggled.
Deutsche bank, Germany's largest lender issued worse than
expected numbers. Starbucks had an 18 pct jump in profit for the
previous quarter and lifted its profit outlook for the year. The
coffee maker is expecting to open additional stores and already
has around 17,000 retail stores in 59 countries. For those
interested, the "Starbucks" name was inspired by a character in
the classic, Moby Dick.
Tonight, the latest growth reading (GDP) will be out of the
U.S for the previous quarter and could be a driver for markets
throughout the session. We will also hear from 41 U.S companies
including Proctor & Gamble. The company owns brands such as
Duracell, Hugo Boss, Pringles and Oral-B.
Volume of shares traded came in at 2.01 billion today, worth
$5.48 billion. 494 shares were up, 509 were weaker and 476 ended
At 4.30pm AEST on the Sydney Futures Exchange, the ASX24
futures contract is down 0.14 pct or 6 pts to 4363.
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 weaker start to trade tonight.
Dow Futures are currently 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) is weaker
and buys US103.7 cents. The AUD is currently trading at £64.1
pence and €78.7 cents.
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