Australia | Jul 03 2013
By Stephen Hogan, Senior Private Client Adviser, Equities/Derivatives
Australian Market
The Australian market (XJO) closed down -97.1 points or 2.01% to 4736.9 today, dropping with global markets and some negative domestic data releases. The market opened sharply lower and continued down til hitting the low for the day of 4720.5 just before 1pm. We saw a small rally in the afternoon but not a huge move higher. Last night the Dow Jones fell -42.55 points or 0.28% to 14,932.40. Chinese official PMI for its services sector have been released today, lowering to 53.9 for the month of June, after 54.3 in May.
In Australian economic data, retail sales have risen 0.1% for May, short of the forecasted 0.3% rise. April's figures have been revised from a 0.2% increase to decease by -0.1%. March's retail sales figures have also been revised down to a decrease of 0.6% from 0.4%. Separately, the trade balance posted a better than expected surplus of $670 million in May – markets were expecting a flat month. And the AIG/CBA Performance of Services Index (PSI) for June rose 0.9 points to 41.5 in June.
New home sales for Australia have risen to an 18 month high and its third consecutive month. The Housing Industry Association (HIA) said its survey of large builders showed sales of new homes rose a seasonally adjusted 1.6% for May. Sales of new detached houses rose 0.9%, while those in the volatile multi-unit sector climbed 5.7%. The rise in new homes is being attributed to the low mortgage rates.
Woodside Petroleum Limited ((WPL)) today has downgraded its production guidance. WPL said that LNG production for 2013 will not exceed 89 million barrels, around 5% lower than previous suggestions that production could be up to 94 million barrels. The slow down can be attributed to the unplanned shut down of WPL's Pluto LNG project off the WA coast.
Flight Centre Limited ((FLT)) has for the second time in two months, lifted its full year earnings guidance. It revealed this morning that a strong end to the year meant pre-tax profits were likely to be at the top end or slightly above previous guidance. Unaudited figures indicated that Flight Centre would post an underlying pre-tax profit of between $338 million and $342 million for the year to June. The figure excludes non-cash items. FLT states that actual pre-tax profits were expected to exceed the underlying pre-tax earnings because it was likely to book an extra $6 million from a property portfolio.
AUD is currently trading at $0.9068, down -$0.0074 against the USD.
Top Performers
Billabong International Limited ((BBG)) up $0.02 or 11.42% to $0.195
Perseus Mining Limited ((PRU)) up $0.05 or 9.70% to $0.565
Linc Energy Limited ((LNC)) up $0.035 or 4.14% to $0.88
New Corporation ((NNC)) up $0.05 or 3.41% to $16.44
Beach Energy Limited ((BPT)) up $0.035 or 2.94% to $1.225
Bottom Performers
Emeco Holdings Limited ((EHL)) down -$0.035 or -12.96% to $0.24
Boart Longyear Limited ((BLY)) down -$0.065 or -11.93% to $0.49
Cudeco Limited ((CDU)) down -$0.155 or -7.75% to $1.845
Mineral Deposits Limited ((MDL)) down -$0.13 or -6.53% to $1.93
Transfield Services Limited ((TSE)) down -$0.045 or -5.88% to $0.715
Our Comments
Well I said this morning that if the market was down more than 20 points by the close I would be astounded. Well, I am astounded.
The volatility and price movements that this market is experiencing over the last couple of years are really something extraordinary and never seen before.
At the end of the day you just have to be smart and not fall into the trap of becoming to short term focused which most people are and end up losing out. It is all about earnings at the end of the day and common sense will come through and win in the end.
(For a more comprehensive summary of last night’s market action see FNArena’s Overnight Report.)
Re-published with permission. Views expressed are not by association FNArena's (see our disclaimer).
Stephen Hogan is an Authorised Representative of Novus Capital. Authorised Representative No.345411 – http://www.stephenhogan.com.au
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