Ben Potter, IG Markets
The Australian market closed slightly lower today following neutral leads from US markets. Technology stocks fronted Wednesday’s rally as the Dow Jones index closed marginally higher. It was the second straight rise and the first back-to-back gain in five weeks. The session was characterised by a slump in Crude Oil prices and further concerns over the US banking sector.
Locally, the S&P/ASX 200 was down 0.3% at 3235. Trade was very quiet today with participants dazed following yesterday’s spectacular rally in the US.
A lot of unfounded information has been thrown around over the past 24 hours, with things like ‘the bull market is back on’ being announced in the media.
Its really confused market participants, especially given what many of them have been through over the last 12 months. Apart from the fact that it’s downright irresponsible too.
In economic news, the Australian labour data was just released and showed the economy created 1800 jobs in February versus an expected drop of 20,000. However, fulltime employment fell by 53,800 and the jobless rate rose to 5.2% versus forecasts of 5%. Overall, the Australian labour market continues to show ongoing resilience and potentially points toward employers doing everything they can to keep employees. The sharp rise in part-time employment shows a concerted effort on behalf of employers to move toward more flexible job practices.
On the downside, the health care (-3.9%), energy (-2%), consumer discretionary (-0.5%) and materials (-0.2%) sectors all weighed.
Sonic Healthcare (-5.6%), CSL Australia (-4.6%) and Ansell (-2.4%) all detracted from the healthcare sector.
In the energy sector, Worley Parsons (-4.6%), Woodside Petroleum (-2.7%) and Origin Energy (-2%) fronted the decliners after Crude Oil fell heavily overnight. It was down more than 7% to below the $43 per barrel level, after data showed an unexpected increase in US Crude Oil inventories. Stockpiles rose by 700,000 barrels last week versus expectations for a decline of 1 million barrels.
In the materials space, Lihir Gold (4.6%), Newcrest Mining (2.7%) and Rio Tinto (0.7%) all advanced following mixed leads. This was offset by falls in BHP Billiton (-0.5%), Orica (-0.7%) and Fortescue Metals Group (-2.5%).
Gold regained some lost ground overnight, currently trading at $909 per ounce on bargain hunting and short covering.
BHP and Rio Tinto were both up strongly in London despite mixed Chinese economic data. At the London Metals Exchange (LME), Copper fell 3.6% despite a large fall in LME stockpiles. Also, Chinese imports of refined metal and semi-finished products were up 40% on the month in February.
On the upside, the property trusts (4.6%) and financials (0.3%) sectors were higher.
Westfield and Stockland Group rose 2.9% and 11.6% respectively after property trusts in the US bounced strongly over the past few days, driven by traders aggressively covering their short positions.
The big four banks were mixed with National Australia Bank (2.6%) and Commonwealth Bank (0.2%) rising. Westpac and ANZ were both weaker.
A lack of major bad news in National Australia Bank’s strategy update this morning triggered a relief rally after the stock has underperformed its peers recently. Unsurprisingly, the bank reinforced its capital position by cutting its first half dividend payment by 25%. It said that while bad debts were rising, they were in line with expectations.