Australian Stock Market Report
Tuesday 9, February 2010

SummaryCloseMovement% Change
All Ordinaries4520.70-18.10-0.41
All Industrials4505.10-16.30-0.36
50 Leaders4534.30-19.70-0.43

Market Turnover
 		$A 4,686,111,198.00

Commentary

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AFTERNOON REPORT
(4.30pm AEDT)

The Australian share market fell back into the red today, weighed down by a weak offshore lead and an indecisive trading update from Macquarie Group (MQG). The All Ordinaries Index (XAO) fell 18.1pts or 0.4pct to 4520.7 while the S&P/ASX 200 Index (XJO) eased by 16.3pts or 0.4pct to 4505.1.

The financial sector fell by 1pct as worries about the fiscal health of the Eurozone continued to weigh on investor sentiment. Shares in the ANZ (ANZ) fell by 1.9pct to $20.57 while Westpac (WBC) eased by 1.6pct to $22.88 and the NAB (NAB) was down 1.4pct to $25.12. Shares in the Commonwealth Bank (CBA) dropped 0.1pct to $52.72. Macquarie Group (MQG) today delivered a trading update to the market, announcing that 2H10 profit could rise by more than 10pct. However MQG also hedged its bets, by claiming there is a chance 2H profit could be the same as 1H. Investors appeared unconvinced by the outlook, sending MQG shares down 6.1pct to $47.28, its biggest slide in eight months.

The energy sector also eased by 0.5pct despite a firmer oil price. At 4pm AEDT the Nymex contract was up 0.8pct to US$71.75 a barrel. Shares in Woodside Petroleum (WPL) fell 0.5pct to $42.11 while Santos (STO) was lower by 1pct to $13.02 and Oilsearch(OSH) dropped 0.4pct to $5.16. Caltex (CTX) fell 0.1pct to $8.96.

The materials sector gained 0.3pct as shares in BHP Billiton (BHP) picked up ahead of the release of the mining giant’s 1H results tomorrow. BHP shares added 0.6pct to $39.85, also boosted by firmer metals trade. Shares in Rio Tinto (RIO) also reversed earlier losses, rising by 0.3pct to $66.99 while iron ore player Fortescue Metals Group (FMG) gained 1.1pct to $4.61. Shares in gold miner Newcrest Mining (NCM) fell 0.2pct to $31.45 while Lihir Gold (LGL) was up 1.8pct to $2.84. Shares in Alumina (AWC) fell 0.9pct to $1.58 after posting a $26 million FY09 loss. However AWC has predicted the worst is over and that its 2010 aluminium demand is expected to rise by 10pct above 2009 levels.

In the retail space, shares in David Jones (DJS) added 2.8pct to $4.74 after the upmarket chain store owner announced a 2.3pct lift in 1H sales and upgraded its profit guidance for 2010. Rival Myer Limited (MYR) shares rose 1.9pct to $3.25 while Harvey Norman (HVN) was up 0.5pct to $3.71 and JB Hi-FI (JBH) rose 1.3pct to $19.32.

Shares in Singtel (SGT), the owner of the Optus network, rose 2.5pct to $2.43 after it reported a 16pct rise in 3Q profit. The carrier also dismissed rumours it was looking to sell the Optus business. Rival Telstra (TLS) fell 0.3pct to $3.35.

Other companies reporting today included Cochlear (COH), the hearing implant maker, and industrial firm Bradken (BKN). COH reported an 8pct lift in 1H profit to a record $75 million, above expectations, sending its share price up 3.5pct to $63.55. Shares in BKN rose 11.6pct to $6.53 despite the company reporting a 26.4pct 1H loss. However BKN indicated things should improve in 2H10.

No major economic data was released today and the Australian dollar finished the session marginally stronger against the major currencies. At 4pm AEDT the Aussie was worth US86.77c, £0.5555 and €63.36c.

On the market overall, a total of 2.74 billion shares were traded, worth $4.69 billion. 398 were up, 693 were down and 317 were unchanged.

At 4.30pm AEDT on the Sydney Futures Exchange, the Share Price Index (SPI) futures contract was unchanged at 4473.

Ahead tonight, Dow Jones components and economic bellwethers Coca-Cola and Walt Disney are due to report. US wholesale inventories figures for December are also slated for release.

Juliette Saly
CommSec Market Analyst

LUNCHTIME REPORT
(12pm AEDT)

The Australian share market has fallen back into the red today, due to a weak lead from Wall Street and an unconvincing trading update from Macquarie Group (MQG). The All Ordinaries Index (XAO) is down almost 43pts at lunchtime in the East to 4496.

Financial stocks are under the most pressure, with the sector lower by 1.7pct. Shares in MQG have fallen 6.5pct to $47.07 after the investment bank tentatively lifted its guidance, but failed to provide much assurity. Among the majors, Westpac (WBC) is weakest, down 3pct to $22.55 with concern about the financial health of the Eurozone still impacting the banks.

The materials sector is down 0.7pct despite firmer metals trade in London, while a firmer oil price has failed to lift the energy sector which is down 1pct.

Elsewhere shares in David Jones (DJS) have gained 1.5pct to $4.68 on a strong 1H sales result. Hearing implant maker Cochlear (COH) has gained 4.1pct to $63.92 after posting a record 1H profit and in the industrials space, Bradken (BKN)is up 12.1pct to $6.56 after flagging an improvement in trading conditions despite a 1H loss.

The Australian dollar is worth US86.44c, £0.5548 and €63.3c.

Juliette Saly
CommSec Market Analsyt

MORNING REPORT
(8.15am AEDT - US Market close update)

The US Conference Board Employment Trend Index rose for the fifth consecutive month, from 92.3 to 93.2 in January - marking the highest reading in a year. The index is now down just 0.7pct on a year ago.

European shares rallied of three month lows on Monday, boosted by bargain hunting. Energy stocks received a boost from the higher crude oil price. Banking stocks rebounded after earlier losses. The FTSEurofirst index rose by 0.7pct with the UK FTSE higher by 0.6pct and the German Dax up 0.9pct.

US sharemarkets were weaker after a volatile session. Worries over the euro zone´s fiscal health continued to weigh on markets, offsetting a host of broker upgrades. Financial and banking stocks came under pressure as the market waited on Federal Reserve Chairman Bernanke´s testimony in front of the House Financial Service committee, later this week, where it is believed he will outline the Fed´s ´´exit strategy´´. At the close, the US Dow Jones index was lower by 103 points or 1.0pct with the S&P 500 down 9pts and the Nasdaq was lower by 15pts or 0.7pct.

US treasuries rallied in late trade on Monday (yields lower) in a flight to quality as equity markets weakened. US 2yr yields fell by 1pt to 0.77pct with US 10yr yields rose 1pt to 3.57pct.

The Euro and commodity currencies rallied against the greenback in overnight trade. The Euro recouped some of last weeks losses, rising from lows near US$1.3625 to near US$1.3710, ending US trade near US$1.3670. The Aussie dollar rose from lows near US86.35c to US87.10c, ending US trade near US86.45c. And the Japanese yen hit early lows near 89.55 yen per US dollar to JPY89.20, ending US trade near JPY89.30.

US crude oil prices edged higher on Monday as the weaker US dollar provided support for the oil price. An unexpected cold front in the US has driven speculation that the demand for US heating oil could rise in the coming week. The Nymex crude oil contract rose by US$0.70 to US$71.89 and London Brent crude rose by US$0.06 to US$69.65 a barrel.

Base metal prices rallied on the London Metal Exchange on Monday as bargain hunting and short covering drove prices higher. The weakness in the greenback, further supported commodities across the board. Zinc rallied 4.3pct with other metals higher between 1.3-2.7pct. And the price of gold rose by US$13.40 an ounce to US$1,066.20.

Ahead: In Australia, NAB Business Confidence is released. In the US, wholesale inventories is scheduled for release. Earnings results are expected from Alumina, Bradken, Cochlear, David Jones, Macquarie Group and Singapore Telecom.

Craig James
CommSec Chief Economist

This commentary is a general account of the day's trading and is not intended to be taken as a recommendation to buy, hold or sell any particular stock.