(IBTimes) - MARKET CLOSE
The Australian sharemarket lost ground for the second
consecutive day, with the All Ordinaries Index (XAO) falling by
2.4 pct or 101.6 pts to 4214.7. Shares have fallen by around 5
pct so far this month and have significantly reduced the gains
for the calendar year to just 2.5 pct.
The uncertainty in Europe continues to concern investors
worldwide. It is now virtually a certainty that the Greeks will
need to return to the polls at some point next month to nominate
a Greek President. The Greeks have failed to form a government
nine days after their federal elections took place.
Francois Hollande was sworn in as the French President last
night but this was not without drama. Mr Hollande's plane headed
for Germany was struck by lightning and returned to France for
replacement (no one was injured). Mr Hollande's political
philosophy differs from Angela Merkel's.
Last night, the Eurozone barely escaped falling into a
'technical' recession. This was largely thanks to Germany, which
expanded by a more than expected 0.5 pct. Germany accounts for
around 27 pct of the Eurozone economy. France remained flat,
while Italy and Spain both contracted. Finland, Austria, Belgium
and Slovakia were amongst the only nations to expand in the
The European Finance Ministers met in Brussels last night and
indicated that they are ready to discuss some changes to the
agreement between Greece and the Eurozone. Prior to this taking
place however, a government needs to be formed in Greece.
On the Australian sharemarket today, the utilities ended a
touch higher but only make up around 2.5 pct of the Aussie
market. Once again, the mining and energy sectors were hit hard
while the industrials also felt the pain. Problems in Europe are
putting global growth prospects under risk. BHP Billiton (
) fell 4.05 pct or $1.37 to $32.49 today while Rio Tinto (
) slumped 3.85 pct or $2.32 to $57.99. BHP is now trading at its
worst level in three years while RIO is at its cheapest price
since October 2009. Australia's third largest iron ore miner,
Fortescue Metals (FMG) fell by 5.1 pct or 26 cents to $4.84. FMG
has plummeted by more than 12 pct over the past four days.
), one of the world's largest shopping mall owners held its
Annual General Meeting (
) with shareholders today. It said that the first quarter of the
year has been broadly as expected by management. WDC shares fell
2.23 pct or 21 cents to $9.22.
WDC's property portfolio is comprised of around 120 shopping
centres in a number of countries including the U.K, U.S, New
Zealand and Australia.
Building materials company, CSR Limited (CSR) posted a full
year net profit of $76.3 million, compared to a $78 million loss
in the previous year. Its share price still fell 1.5 pct after
CSR did not seem upbeat for the housing construction industry's
prospects for the year.
Logistics company, Toll Holdings (
) was one of the worst performers of the day, after a significant
downgrade to its profit expectations for the second half of the
year. TOL shares fell 15.23 pct or 85 cents to $4.73.
Tomorrow, Adelaide Brighton (ABC), ROC Oil Company (ROC) and
Ivanhoe Australia (IVA) will all be holding their AGMs. ABC is a
supplier of cement and lime to the construction industry, ROC is
an oil and gas company with operations in the U.K and the Asia
pacific region, while IVA is a minerals exploration and
development company with projects in Queensland.
Today was a busy day of economic releases, with both the
latest consumer sentiment/confidence report and a quarterly
document on Australian wages out this morning.
Consumer sentiment improved for the first time in three months
by 0.8 pct, but is still around 8 pct lower than this time last
year. This report is released on a monthly basis by Westpac and
compiled by conducting a survey of around 1,200 consumers asking
a variety of questions on topics such as employment and expected
future economic conditions.
Commsec Economist, Savanth Sebastian said that "The Reserve
Bank would have hoped that the deep rate cut would have provide a
positive shock to confidence and be a catalyst to drive activity
but in the short-term it is yet to have the desired effect. And
while the latest result doesn't bode well for retailers (who have
been facing tough trading conditions for some time, the budget
handouts begin in earnest this week, with $110 per child to be
distributed to households - a result that should support near
The Wages Price Index rose by 0.9 pct in the previous quarter
as expected. This measures the change in the price both
businesses and government pay for labour (not including bonuses).
The index is considered to be a leading indicator of consumer
inflation (if businesses are paying more for staff, the cost is
likely to be passed on to the consumer.)
Mr Sebastian said that "It is the perfect outcome. Wages are
still rising at a faster pace than underlying inflation. So the
modest real wage gains are serving to support spending. More
importantly, inflationary pressures are under control and given
that the job market is going sideways, it is likely that growth
in wages over the coming year will remain balanced. The Reserve
Bank has identified labour costs and productivity to be the two
hot button issues to watch. And while wages have been contained
there is no doubt that productivity has been weak. However the
combination of continued economic growth and a flattening of the
job market suggest that productivity may have picked up in recent
months. The tame growth of wages keeps the door open for another
rate cut. Most likely this would occur at the August Board
meeting, but if the European situation was to deteriorate
markedly in the next few weeks, an earlier rate cut couldn't be
No economic data is scheduled for release in Australia
In Europe tonight, Italy's trade balance will be issued for
March at 6pm (AEST), the latest consumer inflation and Germany's
10-year bond auction will also take place.
The British unemployment rate is out and is expected to remain
at 8.3 pct while the Bank of England's Governor King will speak
and the central bank will also issue an inflation report at
7.30pm (AEST). The European Central Bank's (ECB) President, Mario
Draghi will be delivering a speech in Frankfurt.
It will be a busy night in the U.S tonight, with the latest
housing starts report out at 10.30pm (AEST) along with building
permit numbers. Building starts measure the number of new
residential buildings that started being built in April, while
permits measure the number of new residential building permits
which were issued by government in the previous month. Both
reports give the market an idea how the construction sector is
fairing (one of the first necessary steps to build a property is
to receive a permit (the OK) to do so).
The results of an interesting study carried out by the Program
for Public Consultation (PPC), the Stimson Centre and the Center
for Public Integrity (CPI) in the U.S have been issued. Each
participant in the study was asked what decisions they would make
on defence spending if they were a member of U.S Congress. The
survey found that 76 pct of participants would cut the national
defence budget. 90 pct of Democrats would cut spending while 67
pct of Republican supporters would do the same. The U.S
government spends around 30 times more on its military than
Australia. For those interested in reading the report, feel free
Volume of shares traded came in at 2.23 billion today, worth
$5.79 billion. 175 shares were up, 933 were weaker and 311 ended
At 4.30pm AEST on the Sydney Futures Exchange, the ASX24
futures contract is down 0.07 pct or 3 pts to 4156.
Due to daylight savings, most major European markets are now
trading between 5pm (AEST) and 1.30am (AEST). Stocks are expected
to open in the red tonight.
Dow Futures are lower, indicating that U.S stocks could open
weaker 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) was trading
below parity against the greenback for the duration of the day,
and currently buys US98.8 cents. The dollar is trading at its
lowest level since 19 December last year. The AUD is currently
trading at £61.9 pence and €77.8 cents.
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