(IBTimes) - MARKET CLOSE
The Australian sharemarket lost ground today for the first
time in four sessions, with the All Ordinaries Index (XAO) easing
by 0.2 pct or 10.3 pts to 4494.5. The mining, energy and
industrial sectors all ended lower which put downward pressure on
the broader market. Those three sectors make up around 37 pct of
the Australian sharemarket.
The banks were in focus today, with two of the big four banks
passing on part of the Reserve Bank's (
) 50 bps rate cut over the past 24 hours. Commonwealth Bank of
) cut rates by 0.4 pct while National Australia Bank (NAB) cut
its standard variable rate by 0.32 pct. Westpac (
) is expected to announce its decision tomorrow and we should
hear from ANZ Banking Group (ANZ) next Friday.
Westpac was the best performing bank today, with its shares
rising by 0.97 pct or 22 cents to $22.91. National Australia Bank
(NAB) rose 0.41 pct or 10 cents to $25.20, CBA ended flat and ANZ
fell by more than 0.6 pct.
Australia's second largest bank, WBC reported a 25 pct slump
in its first half profit (six months to 31 March) to $2.97
billion. This was broadly in-line with expectations, but the bank
recorded its smallest improvement in profit in three years. The
result was partly impacted by bad debts and a fall in its
margins, which have declined by 6 bps. The Australian consumer is
still shying away from taking on additional debt, with customer
deposits in accounts rising by 11 pct to $320 billion while
lending only increased by 5 pct over the half.
WBC is Australia's first company and has over 12.4 million
customers. It also holds around 23 pct of the household deposit
market share. The bank's CEO, Gail Kelly said that she expects
the difficult and volatile conditions to continue globally and
Asia to become increasingly important to growth. She is also
Australia's highest paid woman and has done exceptionally well in
the business world. She became the first female Chief Executive
of a top 15 company in 2008. Interestingly, she originally taught
Latin in a South African high school prior to moving into the
The bank announced an 82 cent a shares dividend, scheduled to
be paid to shareholders on July 2. WBC's shares have improved by
around 15 pct since the start of this year, which is around 5.5
pct more than the broader sharemarket.
Harvey Norman (HVN) was one of the worst performers, after
delivering a disappointing sales update and a larger than
expected fall in its profit margin. Retailers have been resorting
to heavy discounting to attract customers. HVN is around twice as
large as JB Hi-Fi (JBH) on the Australian sharemarket. Both JBH
and HVN fell by 1.5 pct today.
On the economic front, a report showed that beer consumption
has hit a 65-year low. Surprisingly, total consumption of alcohol
fell for the fourth consecutive year.
Commsec Economist, Savanth Sebastian said that "Australia used
to be a beer drinking nation. Well that has changed, just like a
whole host of other things. Wine and beer consumption were neck
and neck at the end of June last year and it could very well be
the case that today more Australians are consuming alcohol in the
form of wine, not beer. Interestingly Aussies aren´t just cutting
back on beer, alcohol consumption as a whole fell for the fourth
straight year and is now down at 9-year lows. Perhaps it's all
about quality not quantity or perhaps Aussies are taking health
matters seriously. Not only are we cutting back on alcohol,
spending on cigarettes and take-away food is falling. Australia
is making a serious attempt at climbing the ranks of world
The latest Performance of Services Index (
) plummeted by 7.4 pts to 39.6 last month which is a 3-year low.
The index is calculated by conducting a survey of about 200
service-based companies. Mr Sebastian said that "The latest
figures on the services sector were clearly disappointing.
However the result does further validate the recent super-sized
rate cut by the Reserve Bank. The services sector has contracted
for nine months out of the past year. And the latest result
suggests that that there is no real catalyst for a turnaround. In
fact in April the pace of contraction was the fastest in three
Most markets in the region ended in the red today, with shares
in the Philippines one of the exceptions. The Japanese
sharemarket was closed today for the Constitution Day holiday. It
is a day intended to reflect on the meaning of Japanese
In Europe tonight, the European Central Bank (ECB) will be
meeting to make a decision on interest rates. The market is
expecting rates to remain at 1 pct for the sixth consecutive
month. This will be followed by a press conference held by the
ECB. The French government will hold a 10-year bond auction, with
borrowing costs expected to remain elevated.
Last night, the Eurozone's jobless rate hit an all-time high
after rising from 10.8 pct to 10.9 pct in March. The two
remaining candidates for the French Presidency faced off in a
televised debate overnight. Instant polls were showing the
Socialist Party's Francois Hollande as the clear victor with 64
pct of the vote. The elections take place next week in both
France and Greece.
In the U.S tonight, the weekly unemployment claims report will
be issued at around 10.30pm (AEST) and is expected to improve to
381,000 claims. This report measures the number of people
applying to receive unemployment benefits for the first time over
a week. Two Federal Reserve (the U.S central bank) officials will
be delivering talks late in the evening.
Volume of shares traded came in at 1.97 billion today, worth
$4.59 billion. 428 shares were up, 582 were weaker and 394 ended
At 4.30pm AEST on the Sydney Futures Exchange, the ASX24
futures contract is down 0.09 pct or 4 pts to 4425.
Due to daylight savings, most major European markets are now
trading between 5pm (AEST) and 1.30am (AEST). Futures in the U.K
are pointing to a slightly stronger start to trade tonight.
Dow Futures are currently a touch 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 (
) continues to lose ground against the greenback and buys US103
cents. The AUD is currently trading at £63.6 pence and €78.3
cents. The AUD hit a low of US102.85 earlier in the session.
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