Australian Stock Market Report – Afternoon 8/3/2012

AFTERNOON REPORT
(5pm AEST)

Disappointment was the theme of the trading day, after European Central Bank chief Mario Draghi last night missed his opportunity to become Super Mario. Despite bold commentary late last week, the ECB took no firm action to inject more stimulus into the global economy. The ECB instead left its refi rate unchanged at 0.75pct, with the Bank of England also leaving rates on hold at 0.5pct. The disappointment caused US and European investors to sell out of equities last night and the same occurred here locally today. By close, the All Ordinaries Index (XAO) was down 47.1pts or 1.1pct to 4243. Over the course of yet another volatile week, the market added 0.2pct.

Selling was right across the board today, although material stocks copped a battering, following gains yesterday and losses on the base metals market in London. Index leader BHP Billiton (BHP) fell 2.3pct to $31.30 while Fortescue Metals Group (FMG), which rallied more than 5pct yesterday, fell 4.4pct to $4.18. BHP today announced a US$2.8billion write-down of its Fayetteville shale assets in the US. The write-down is only for the Fayetteville shale, not BHP's PetroHawk assets. CEO Marius Kloppers has already announced he's foregoing bonus payments this year. Resource stocks make up about a fifth of the value of the overall sharemarket, so a big fall in the materials sector impacts the entire bourse.

Elsewhere financial stocks also lost ground. Shares in Westpac (WBC) fell 1pct to $23.30 while Macquarie Group (MQG) was down 0.6pct to $24.76 and the NAB (NAB) shed 0.6pct to $24.99. Shares in the Commonwealth Bank (CBA) today lost 1.1pct to close the week at $55.98, after hitting a 26 month high of $57.53 earlier in the week. CBA today announced that former CommSec Managing Director Matt Comyn would head up the Group's Retail Banking division, which includes front-line branch staff.

Telstra (TLS) had a strong performance on defensive buying, rising 0.8pct to $4.02. TLS closed at $4.04 on Wednesday, its highest close since December 2008.

Medical developer Resmed (RMD) also looked strong, adding 9.3pct to $3.30 after announcing a 12pct rise in annual profit due to stronger sales in the US.

Some weakness however in the media sector, with shares in the Ten Network (TEN) down 6.4pct to $0.44.

In Japan, shares in Sharp plunged to multi-decade lows on a profit warning. Sharp will also cut 5000 jobs after posting a huge quarterly loss. The company hires 57,000 workers worldwide.

Spare a thought for Facebook founder Mark Zuckerberg, whose wealth has plummeted since the disastrous float of Facebook. The 28 year old is no longer amongst the world's 10th richest technology billionaires after Facebook shares plunged to a record low of US$20.04 per share in New York overnight. Facebook shares are down 47pct from its IPO (float) price of US$38 per share, while Mark Zuckerberg's wealth is now estimated at US$10.2 billion, down $400 million.

The number of people coming to Australia for holidays or business rose for the first time in three months, lifting by 3.4pct in June to record highs. Arrivals are up 8.1pct on a year ago.

A record 55,200 tourists from China came to Australia in March, up 22.4pct on a year ago.
The number of Aussies travelling overseas for holidays or business rose for the third time in four months, lifting by 1pct in June to record highs. Tourist departures are up 8.4pct on a year ago in seasonally adjusted terms (up 5.2pct in trend terms).

In seasonally adjusted terms the tourism deficit - the gap between departures and arrivals eased from 185,800 in May to 176,200 in June. In trend terms the tourism deficit stood at a record high of 179,400.

The rolling annual number of net permanent and long-term arrivals to Australia has risen for the 15th straight month. In the year to June net long-term arrivals stood at a 29-month high of 283,330. The record high was net-long term arrivals of 341,280 in the year to July 2009.

The actual number of permanent settlers entering Australia stood at 13,460 in June, up 1,760 on a year ago. Over the past year 158,940 people came to Australia as permanent settlers - a 37-month high.

The Australian dollar ended the day's trade below US105c, but higher than where we saw it this time yesterday. At 5pm AEST the Aussie was worth US104.95c, £0.6758 and €86.05c.

On the market overall, a total of 1.39 billion shares were traded, worth $3.69 billion. 312 were up, 535 were down and 348 were unchanged.

At 4.30pm AEST on the ASX24, the SFE 200 Future Index was at 4185, down 43pts or 1pct.

Ahead tonight, the monthly jobs report is released in the US.

[Kick off your trading day with our newsletter]