Australian Stock Market Report – Afternoon 1/14/14

EVENING REPORT
(5.30pm AEDT)

The Australian sharemarket recorded its biggest daily fall in four months, with the All Ordinaries slumping by 1.5 per cent and ending very close to a four week low. Local shares are down 2.5 per cent since the start of January; making it the worst start to a new year since 2010. Today's weakness was largely expected though, with the DOW index slumping by 1.1 per cent overnight. The falls were partly due to comments by a U.S. central bank official who said the Federal Reserve will continue to taper together with a disappointing jobs report on Friday and concerns relating to the U.S. earnings season (which picks up a notch tonight). Today was the busiest day so far in 2014.

All sectors struggled, with hefty losses in the financial industry the biggest drag. The big four banks wiped out 23pts from the All Ordinaries Index, with losses between 1.5 per cent and 1.96 per cent across the sector.

The miners were the lone improvers on Monday; however more than wiped out all of yesterday's gains; slumping by 1.1 per cent. Australia's biggest resource company, BHP Billiton (BHP) lost 1.15 per cent, the smaller Rio Tinto (RIO) eased by 0.25 per cent and gold miner Newcrest Mining (NCM) slipped by 0.79 per cent (jumped by 6.1 per cent yesterday).

There was no major economic news issued in Australia today; however things will get a little busier tomorrow and on Thursday. On Wednesday, we'll find out how confident consumers currently are with their finances and their perceptions of the Australian economy. This is a key part of spending and hence growth (the more optimistic people generally are, the more likely they are to turn this positivity into spending which in turn contributes to economic growth).

Tonight, two of the world's largest financial institutions will be delivering quarterly profit results. JP Morgan Chase, which has improved by 25 per cent in just 12 months and Wells Fargo, which has surged by 30 per cent over the same period. The focus will be if the recent gains in price were warranted and backed by higher earnings.

Investors in the Japanese market were welcomed into the new trading week with a 3.1 per cent slump; as the world's second biggest market played catch-up (closed on Monday due to a holiday).

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