MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket lost ground for the second time this week, with the ASX 200 index (XJO) falling 1.2 pts or 52.7 pts to 4251.2 while the broader All Ordinaries index (XAO) dropped 1.2 pct or 52.4 pts to 4319.4. This takes the falls for August so far to 4 pct.

Despite the pullback, we should not be too upset because we have outperformed the American, British and Japanese sharemarkets so far this week, with the XAO improving by around 1.9 pct over the past four sessions.

The S&P/ASX 200 Energy index fell 2.68 pct or 372 pts to 13520.6, with Woodside Petroleum (WPL) dropping 2.36 pct or 89 cents to $36.87 and the smaller Santos (STO) falling 3.79 pts or 46 cents to $11.68 ahead of its profit result.

The S&P/ASX 200 Materials index lost 1.78 pct or 224.2 pts to 12352.7 with both BHP Billiton (BHP) and RIO Tinto (RIO) losing ground by market close. The larger BHP slumped 1.81 pct or 72 cents to $39.10 while RIO fell 1.45 pct or $1.08 to $73.34. The price of gold remains close to all time highs, however Australia's biggest gold producer, Newcrest Mining (NCM) fell 1.1 pct or 43 cents to $38.66 by end of business.

The S&P/ASX 200 Financials index ended 0.82 pct or 32.3 pts weaker to 3893.3, with National Australia Bank (NAB) down 0.86 pct or 20 cents to $23.16, ANZ Banking Group (ANZ) fell 0.78 pct or 16 cents to $20.42, Westpac (WBC) dropped 0.63 pct or 13 cents to $20.38 and Commonwealth Bank of Australia (CBA) eased by 0.17 pct or 8 cents to $47.32.

Australia's largest brewer, Fosters (FGL) has recommended shareholders reject the $4.90 a share takeover bid from South Africa's SABMiller. This makes it the second time the world's second largest brewer has made an offer for FGL this year. FGL shares gained 0.81 pct or 4 cents to $5.00, taking the gains from the start of the year to 20 pct.

It was yet another big day on the company reporting front today, with around 20 companies posting their profit results throughout the session.

Financial services firm, AMP Limited (AMP) released its latest profit results. Its underlying profit (which is often a better indication of how a company has performed) came in at $455 million and was better than consensus. This result is for the first half (six months to June 30). AMP shares rose 2.65 pct or 11 cents to $4.26 by market close.

The ASX posted Net Profit After Tax (NPAT) of $352 million, compared to consensus of $349 million. The Australian sharemarket operator also declared a final dividend of 93 cents per share, taking its payout for this calendar year to $1.83. A new Chief Executive is expected to be announced at the Annual General Meeting (AGM) on September 22. ASX shares fell 0.34 pct or 10 cents to $29.40.

The very diversified, Wesfarmers (WES) reported its full year results today, which came in at a better than expected $1.92 billion. Cashflow was in line with forecasts. Strong results were posted by both Coles and Bunnings, its resources division exceeded expectations while both Kmart and Target disappointed with their results. WES shares rose 0.36 pct or 11 cents to $30.41 by market close today.

This is not a huge surprise because according to recent retail trade statistics released by the Australian Bureau of Statistics (ABS), sales at department stores have fallen by 1.1 pct over the past 12 months while sales at supermarkets and grocery stores have remained flat over the same period. IVC, BLD, STO, QBE, STO, ABS

InvoCare (IVC), one of Australia's biggest funeral home and cemetery operators reported a net profit of $14.5 million in addition to a fully franked, ordinary dividend of 13.50 cents per shares which will be paid to shareholders on October 7. IVC shares fell 1.65 pct or 12 cents to $7.14.

Building materials company, Boral (BLD) released its profit results yesterday and received a broker downgrade today. BLD shares fell 1.9 pct or 7 cents to $3.62.

There are around 25 companies releasing their results tomorrow including oil and gas producer, Santos (STO), one of Australia's largest insurers, QBE Insurance (QBE) and surf wear retailer, Billabong International (BBG).

Australia's Economy: Wages

On the economic front Thursday, the Australian Bureau of Statistics (ABS) published its quarterly Average Weekly Earnings (AWE) report.

The average weekly wage rose by 1.2 pct between March and May this year. The average wage (not including bonuses and overtime) stands at $67,891. No big surprises that the highest average wage is in the mining sector at $110,328 per year. The accommodation and food services sector in addition to retail have the lowest wages at around $48,000.

One surprising result is the different between how much men and women are currently earning. Over the past 12 months to May, men are earning close to $13,000 more than the average woman per year, making it the most significant disparity in 28 years. One of the main reasons for the pay discrepancy is the higher demand for employees in male dominated sectors such as mining.

Commsec Economist, Savanth Sebastian commented by saying that "Interestingly despite sustained growth in real wages Aussie consumers are remaining ultra conservative and the trend is unlikely to change anytime soon. Especially given that the growth in full time earning including bonuses and overtime was a much more sedate 3.9 per cent. And even yesterday's labour price data highlighted that wages including bonuses only grew by 0.4 per cent in the June quarter - marking the smallest increase on record. Clearly some sectors and households would be relying on overtime and bonuses to support the household spending."

Almost all Asian markets fell today, with Japan's Nikkei 225 losing 1.25 pct or 113.5 pts to 8943.76, South Korea's KOSPI index dropped 1.7 pct or 32.09 pts to 1860.58, Hong Kong's Hang Seng fell 1.19 pct or 241.5 pts to 20047.53 and China's Shanghai Composite index slumped by 1.61 pct or 41.78 pts to 2559.47.

It was relatively quiet on the economic front in the region today, with only Japan's trade balance result released. Exports have fallen for a fifth consecutive month in July.

There is no major economic data scheduled for release out of the Eurozone tonight, however the U.K's latest retail sales report will be out at 6.30pm (AEST). Spending at the retail level is expected to have increased by 0.3 pct in July.

EUROPE, US MARKETS

It will be a busy night for economic data out of the U.S however, with the latest inflation reading out at 10.30pm (AEST). The market is expecting prices have increased by 0.2 pct in July. The Department of Labor will also publish its weekly report on the number of Americans filing for unemployment benefits for the first time last week. Expectations are for a rise in the number of people requesting these benefits to 402,000.

The volume of shares traded came in at 2.4 billion today, worth $5.58 billion. 355 shares were up, 653 finished weaker and 348 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is down 0.43 pct or 18 pts to 4201.

Most major European markets trade between 5pm (AEST) and 1.30am (AEST). Futures in Europe are pointing to a weaker start to trade tonight.

Dow Jones futures are lower, indicating that U.S shares could start around 1 pct weaker when American markets open at 11.30pm (AEST).

Turning to currencies, the Australian dollar is stronger and buys US104.8 cents, JPY80.2 and EUR72.7 cents.

One of the best performing stocks today was Adelaide Brighton (ABC), which rose 3.91 pct or 10 cents to $2.66. Despite posting a first half profit decline, the supplier of cement and lime said it is on track to post a stronger second half result. ABC was first listed in 1960 and has a market capitalisation of $1.69 billion.

(From Steven Daghlian, Commsec Market Analyst)