(IBTimes) - MARKET CLOSE
The Australian market fell for the second straight day today,
with the All Ordinaries Index (XAO) down 0.8 pct or 35.1 pts to
4459.4. Despite the losses, local shares still ended around 0.5
pct higher for the week.
Last night, most global markets weakened with shares in the
tech specific NASDAQ amongst the worst performers. The European
Central Bank (ECB) decided to keep interest rates steady at 1 pct
for the sixth consecutive meeting overnight. Interestingly, the
ECB President Mario Draghi said that officials did not discuss a
rate cut in the meeting. This is a little peculiar since the
meeting was created for officials to make a decision on rates on
a monthly basis. Mr Draghi also said that the Eurozone's outlook
has become a little 'more uncertain' as of late. In the U.S, the
number of jobless claims improved more than expected to 365,000,
which was not enough to lift markets higher.
Commodity prices fell overnight which resulted in the most
significant weakness being felt by our mining and energy
companies. Rio Tinto (
), one of Australia's largest diversified miners fell 1.13 pct or
74 cents to $64.91 while BHP Billiton (
) eased 0.61 pct or 22 cents to $36.03. The price of oil slumped
by around 2.5 pct overnight and put some of our largest oil and
gas producers under pressure. Woodside Petroleum (WPL) slumped by
2.21 pct or 80 cents to $35.40 while Santos (
) dropped by a more significant 2.98 pct or 42 cents to
Three of the four major banks have now passed on part of the
Reserve Bank of Australia's (
) 50 bps rate cut. Today, Australia's second largest bank,
) cut its standard variable rate by 0.37 pct to 7.09 pct.
Commonwealth Bank (CBA), cut rates by 0.4 pct to 7.01 pct,
National Australia Bank (NAB) dropped its rates by 0.32 pct to
6.99 pct. ANZ Banking Group (ANZ) is expected to announce its
decision to the market next Friday and is likely to pass on any
rate cuts on the following Friday.
Qantas (QAN) is set to save as much as $400 million by
delaying the delivery of two brand new A380 Superjumbos by a
number of years (as many as four). QAN shares fell by 1.25 pct
On the economic front today, the RBA released its quarterly
Statement on Monetary Policy and has kept the door open for
further rate cuts this year. The central bank now expects
inflation to remain towards the lower end of its 2-3 pct target
band. Controlling inflation is one of the RBA's main roles and it
seems to be less of a concern for the time being.
Commsec Economist, Savanth Sebastian said that "The Reserve
Bank has shifted its mid and longer term forecasts to broad
ranges rather than specific forecasts. And while the shift to a
growth band is fine, the magnitude of the range leaves something
to be desired. The 2.5- 3.5 per cent growth forecast for December
2013 hardly provides any clarity on where growth is likely to be
- in other words growth could be below, at or above trend
"normal" rates. It is a similar story on the inflation front and
effectively means that the longer term forecasts are less useful
in gauging the Reserve Bank's view on how the economy will
Next week will be busy, with the Federal Budget delivered in
Canberra on Tuesday. The latest retail sales and jobs reports
will be the key areas of focus. Australia's jobless rate is
likely to stay steady at 5.2 pct, compared to the Eurozone's 10.9
pct and the 8.2 pct unemployment rate in the U.S.
Commsec's Chief Economist, Craig James said that for the
Federal Government "To achieve a budget surplus of $1.5 billion
from the current deficit of $37 billion would require no change
in spending, 11 per cent growth in revenues and possible another
$4-5 billion in additional savings. At the same time the Reserve
Bank acknowledges that economic growth is sub-standard and has,
in turn, cut interest rates by half a per cent."
Asian markets finished mixed today. Shares in the Philippines
and Taiwan edged higher, while the Hong Kong and South Korean
markets lost ground. The Japanese market was closed today due to
a public holiday for the second day running. The last operational
nuclear power plant is expected to shutdown tomorrow in Japan.
Residents living near the plant have been concerned with the
safety of the energy source. Japan is the world's third largest
economy and sharemarket. The Tokyo Stock Exchange is around 2.5
times larger than the Australian sharemarket.
Looking ahead, next week will be the busiest week of the month
in China for economic news.
In Europe tonight, the latest retail sales report will be
issued, while both the French and Greek Presidential elections
will be taking place this weekend. The European Union and the
International Monetary Fund agreed on a €173 billion bailout
package for the Greeks, however the troubled nation still has to
find ways to cut spending by €11.5 billion by the end of June to
receive all funds. Riots are likely this weekend in Greece by
In France, the showdown between the Socialist Party's Francois
Hollande and the current French President, Nicolas Sarkozy will
take place. Mr Hollande has been leading opinion polls from the
outset of the campaign and is the favourite to win the
Presidency. President Sarkozy has been closing the gap over the
past few days however.
In the U.S tonight, the latest monthly jobs report will be
issued at 10.30pm (AEST). An additional 176,000 jobs are expected
to have been created last month, while the unemployment rate is
expected to stay steady at 8.2 pct.
Volume of shares traded came in at 1.87 billion today, worth
$4.13 billion. 352 shares were up, 629 were weaker and 409 ended
At 4.30pm AEST on the Sydney Futures Exchange, the ASX24
futures contract is down 0.07 pct or 3 pts to 4388.
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 weaker start to trade tonight.
Dow Futures are currently a touch higher, indicating that U.S
stocks could open in the black 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) continues
to lose ground against the greenback and buys US102.6 cents. The
AUD is currently trading at £63.4 pence and €78 cents.
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