Australian Stock Market Report – Afternoon 4/20/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket was trading in the red for almost the whole session until the last minute or two of the day. The All Ordinaries Index (XAO) rose 0.1 pct or 3.1 pts to 4444.40, making it three days of gains this week.

The fact that both European and U.S markets lost ground last night makes it a little more impressive. Last night, the Spanish sharemarket hit at its worst level in three years. There were a number of disappointing economic readings in the U.S also.

Australia's largest supermarket chain, Woolworths (WOW) gave the market its quarterly sales update today and said it made $14 billion worth of sales in the third quarter (January to March 2012). This was an increase on the previous year, with sales rising in its supermarkets, bottle shops, its petrol and hardware divisions and Big W (which Woolies also owns).

Sales were still lower than market expectations however, with revenue from its food and liquor divisions the biggest let downs. The food and liquor divisions account for around 80 pct of the company's total profit. It has opened six new supermarkets so far this year, bringing the total to 867. Big W did better than expected, showing that the lower end of the consumer discretionary market is still spending.

Retailers are also ramping up their online presence, with Australians turning to the internet for bargains more than ever before. WOW recorded a 108 pct rise in online sales, with Cellarmasters (its online wine retailing business) making up a large part of the rise. Cellarmasters currently has over 330,000 online customers.

Last month, WOW said it made around $1.1 billion in profit between July and December last year. This was largely in-line with expectations and was a rise on the previous year. Its shares edged higher today and are up around 3 pct this year (significantly underperforming the broader market).

Bradken (BKN) revised down its profit expectations for the year today, due to higher costs and lower revenue in its rail division. BKN is a global supplier of products to the mining, rail and industrial sectors. BKN shares slumped by 10.76 pct.

Three of the big four banks edged higher today, however National Australia Bank (NAB) fell by 0.2 pct. Both BHP Billiton (BHP) and Rio Tinto (RIO), Australia's two largest miners ended largely flat.

The latest import and export price report for the March quarter (January to March 2012) was issued today. Imported goods are currently the cheapest they have been in 20 years. The price of imported goods fell by 1.2 pct over the quarter. A stronger Australian dollar has been one of the driving forces here. This also moves us one step closer to rate cut by the Reserve Bank of Australia (RBA) next month.

Commsec Economist, Savanth Sebastian said that "All manner of imported goods fell sharply in the first three months of the years, confirming that price pressures are contained. Even if - for some strange reason - the consumer price index is above market expectations, the plunge in prices of imported goods tells the Reserve Bank that future inflation will remain low. Consumers and businesses are both big winners from the slump in prices of imports. Consumers may complain about electricity and petrol prices, but they can't complain about plunging prices for TVs, cars, sporting goods and clothing."

Shares in China rose by more than 1 pct today however all other major markets in the region lost ground. South Korea's KOSPI Index fell 1.26 pct, while stocks in Japan, the Philippines and Hong Kong all eased.

No major data was issued in the region however next Monday we will get an update on China's manufacturing sector at around lunchtime. This tends to have an impact on sharemarkets globally especially if it surprises investors. The ASX will be closed next Wednesday due to the ANZAC Day public holiday.

Tonight in Europe, the latest retail sales report will be issued in the U.K in addition to a business confidence report in Germany.

In the U.S, at least 12 largest companies will be issuing their quarterly profit results including General Electric (the world's eighth largest company) and McDonalds.

It was a quiet end to the week today. Volume of shares traded came in at 1.98 billion today, worth $3.57 billion. 462 shares were up, 515 were weaker and 415 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is a little higher.

Due to daylight savings, most major European markets are now trading between 5pm (AEST) and 1.30am (AEST). Futures in Europe are pointing to a slightly stronger start to trade tonight.

Dow Futures are currently also a little 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) buys US103.3 cents. The AUD is currently trading at £64.3 pence and €78.6 cents.
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