Australian Stock Market Report – Afternoon December 11, 2014

Men watch the stock board at the Australian Securities Exchange (ASX) in central Sydney April 21, 2009. Australian stocks fell 2.6 percent on Tuesday, led down by banks and miners, on fresh concerns about the earnings outlook for domestic companies and a potential surge in sour loans for banks. Reuters/Stringer

 Australian shares ended the day 0.4 per cent lower by the close with some better than expected employment numbers for November helping reduce the losses. The ASX 200 Index managed to remain above 5200pts despite dipping below the key level earlier in the day.

 Energy stocks remained the hardest hit with the industry slumping by 2.75 per cent today, 12 per cent this month and down 25 per cent over the past four weeks. Santos (STO) slumped by 8.2 per cent after cutting its capital expenditure expectations by $700m for 2015.

 BC Iron (BCI) has announced job cuts and cost saving initiatives in an environment where falling ore prices are negatively impacting higher cost producers. The price of iron ore has close to halved this calendar year to US$69 per tonne. BCI is estimated to have a breakeven price around US$70/tonne.

 Construction company Leighton Holdings (LEI) rose by 0.4 per cent and reached an agreement with private hospital operator Healthscope (HSO) for the design and construction of the new Northern Beaches Hospital in Sydney. The project is expected to generate $540m in revenue. Construction of the facility will commence in 2015 and the hospital will open in 2018.

 Retailers were mixed despite no major news. Harvey Norman (HVN) rose by 1.75 per cent following yesterday's 4.7 per cent slump after trading ex-dividend.

 Volume picked up this afternoon with 1.7bn shares traded worth $5.8bn. 328 stocks finished higher, 593 stocks fell and 367 were unchanged.

 Job gains were much more significant than expected last month with 42,700 jobs added taking the gains this calendar year to 170,000. A positive outcome this year has been the 100,000 full time jobs created since January. The market is pricing in a 33 per cent chance of a rate cut in February.

 Despite an early spike today, the Australian dollar gradually eased this afternoon to currently buy US$0.832, €0.668, £0.53 and ¥98.3.

 Tonight will be one of the more important evenings this week in the US. The November read for retail spending will be released in the US at 12.30am AEDT. Recently there has been some debate over the success of the Black Friday sales around Thanksgiving which many consider to have been a little quiet.

 The weekly reading on jobless benefits will also be released tonight. Last week a much better than expected US employment report was issued with 90,000 more jobs created in November than expected.

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