(IBTimes) - MARKET CLOSE
The Australian sharemarket slumped to a 3-week low, with the
All Ordinaries Index (XAO) falling by 2.2 pct or 97.8 pts to
4361.6. The local market had its worst single day since
mid-December last year. Most sectors fell by at least 1.5 pct,
while energy and mining stocks plummeted by more than 3 pct.
The losses came to us courtesy of both the Europeans and the
Americans. On Friday night, U.S shares fell by around 1.5 pct,
after some worse than expected job numbers were released. There
were 115,000 jobs created in April, which was around 50,000 lower
than forecast. The unemployment rate hit a 3.5-year low of 8.1
pct, due to a shrinking workforce. The fact that 350,000
Americans dropped out of the jobs market last month concerned
The French and Greek elections took place over the weekend and
created political uncertainty. Francois Hollande, has become
France's first Socialist President in 17 years and will now serve
a 5-year term. Nicolas Sarkozy has become the first President in
30 years to lose re-election. The Euro hit its weakest level
against the greenback since 2008.
The market seems concerned that Hollande has different
policies than Germany's Angela Merkel. For example, he is not
overly keen on austerity and prefers increasing taxes on the rich
and companies. He has never held a ministerial position in his 30
year career in politics. He was known in the past for being the
partner of Segolene Royal, who lost against Nicolas Sarkozy in
the 2007 Presidential election.
He has vowed to increase taxes for those earning more than $1
million to 75 pct and to use these funds for schools and to
create additional government jobs.
The world's largest miner, BHP Billiton (
) fell 4.05 pct or $1.46 to $34.57 while its smaller competitor,
Rio Tinto (
) slumped by 4.48 pct or $2.91 to $62.00. Since September last
year, BHP shares have been trading within a range between $34.00
The price of oil has slumped sharply and currently trades at
around US$97 a barrel, dipping below the US$100 a barrel mark for
the first time since February.
Whitehaven Coal (WHC) fell by 6.31 pct or 31 cents to $4.60
and has offered $142 million to takeover NSW based coal explorer,
Coalworks (CWK). CWK shares rose by 16.37 pct or 14 cents to 99.5
The financials dropped by 1.4 pct, with the big four banks all
ending between 0.8 pct and 1.7 pct weaker. National Australia
Bank (NAB) was the worst performer while ANZ Banking Group (ANZ)
fell by 1.45 pct ahead of its interest rate decision this
Despite stronger retail sales numbers today, the largest
retailers in Australia all ended significantly lower.
Today was the busiest day of the week on the economic front,
with 5 separate readings released. The number of job
advertisements in newspapers and on the internet slumped by 3.1
pct in April, making it the first pullback in four months.
Interestingly, ANZ (the company that compiles the data) said
that it is "...currently investigating the reliability of data
provided by a small internet website, which has been driving the
recent improving trend in overall job advertising. As a result,
greater caution should be given to the results of the job ads
series in recent months. This may reflect data error or double
counting of jobs already advertised on other larger internet
The National Australia Bank business confidence index improved
from +2.6 in March to +3.7 in April. Any number above 0.0
indicates improving conditions. Commsec's Chief Economist, Craig
James said that "Inflationary pressures remain well contained.
The monthly reading of labour costs "picked up to a modest 1.1
per cent (quarterly rate) in April. The survey suggests that wage
costs pressures are reasonably well contained and are unlikely to
be too concerning for policy makers." Prices rose at a 0.1 per
cent quarterly pace, a similar result to March. Retail prices
fell at a 0.7 per cent quarterly rate in April. But bucking the
trend, purchase costs rose at a 0.7 per cent quarterly rate in
April, up from the 0.4 per cent growth in March."
The latest retail trade and building approval reports were
both better than market expectations today. Retail spending rose
by 0.9 pct (the market was expecting a 0.3 pct improvement) while
building approvals jumped by 7.4 pct (the market was expected a
3.2 pct rise). The number of dwelling approvals granted by
councils to developers is still around 15 pct lower now than it
was a year ago.
Mr James said that "Australia's retailers have finally
something to celebrate. Not only did spending lift in March by
the biggest margin in almost a year, once you adjust for
inflation, the gain over the March quarter was the best in almost
three years. No one will be getting carried away with one month's
sales result. But it shows there is life out there in consumer
land. Why did we start to spend again? It seems like lower prices
had a lot to do with it. There has never been a bigger fall in
retail prices in 30 years. A stronger Australian dollar, cheaper
food, on-going innovation in technology goods, strong global
competition and good old fashioned discounting have prompted
Aussies to part with their cash again."
This week, Newscorp, National Australia Bank and Optus will
release their latest profit results. Oil refiner, Caltex, AMP and
Rio Tinto will all be holding their Annual General Meetings
(AGMs) with shareholders. The latest monthly jobs report will be
released on Thursday, with Australia's unemployment rate expected
to remain at around 5.2 pct and only 5,000 jobs to have been
created last month.
This is the biggest week of the month for economic news out of
China, with the latest inflation, retail sales and investment
reports issued in the latter part of the week. If Chinese data is
positive, it might act as a much needed distraction from European
uncertainty. In Europe, the Bank of England's monthly meeting on
interest rates will take place on Thursday. The U.K's rates are
expected to remain steady at 0.5 pct. The economic calendar in
the U.S will be relatively bare this week.
Tonight, sharmarkets will be closed in the U.K due to a public
Volume of shares traded came in at 2.17 billion today, worth
$5.06 billion. 192 shares were up, 915 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 significantly weaker start to trade tonight (a
2 pct fall is expected). European markets will have their first
opportunity to react to the French and Greek elections.
Dow Futures are 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 US101.6
cents. The AUD is currently trading at £62.9 pence and €78.1
cents. The AUD is trading at its lowest level against the
greenback so far in the 2012 calendar year.
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