The Australian sharemarket ended in the red for the first time in eight sessions, with the All Ordinaries Index (XAO) easing by just 0.3 per cent or 11.8 pts to 4502. Keep in mind that last week, shares improved by 2.5 per cent, which was the local market's third best performance this year.
The struggle to breach 4300 level will still be there today and the challenge to surpass the 4309 level recorded on Monday. The markets will be looking forward to hints for future monetary policy direction to be undertaken by the Reserve Bank of Australia with the release of the February minutes of meeting.
Weakness from the mining, energy and financial sectors held the rest of the market back today. Those three industries combined make up more than 60 per cent of the local market. BHP Billiton (BHP) lost 0.21 per cent or 7 cents to $33.25, Rio Tinto (RIO) finished flat while gold producer Newcrest Mining (NCM) slumped by 3.16 per cent or 92 cents to $28.20. Despite the pullback NCM has managed to improve for four of the past five trading weeks, improving by 17.24 per cent over that period.
The major banks finished mostly lower today with the exception of ANZ Banking Group (ANZ), which rose by just 0.08 per cent or 2 cents to $25.52. Commonwealth Bank of Australia (CBA) eased by 0.46 per cent or 26 cents to $56.59, National Australia Bank (NAB) fell by 0.38 per cent or 10 cents to $26.21 while Westpac (WBC) slid by just 0.12 per cent or 3 cents to $25.85.
One of the better performers was rail freight operator, QR National (QRN) which improved by 5.19 per cent or 18 cents to $3.65. The Queensland government decided to offload around half of its stake in QRN for $1.5 billion. This reduces its interest in the company from 33 per cent down to 16 per cent. QRN has postponed its Annual General Meeting (AGM) to 21 November so as to give shareholders a chance to digest some of the information released today. The market perceived the announcement as a positive development as it reduces government control in addition to the sale not being done at a discount which would have diluted the value of its shares (which was expected).
The retailers also did well today, with the likes of department store Myer (MYR) and specialty retailer Harvey Norman (HVN) both rising by 1.3 per cent while David Jones (DJS) rose by 0.79 per cent.
On the economic front today, a report showed that there was a slide in the number of jobs being advertised by businesses online and in newspapers for the sixth straight month. The number of job ads fell by 2.8 per cent in September and there are now almost 11 per cent few jobs being advertised than a year ago.
CommSec's Chief Economist, Craig James said that "Simply, businesses currently aren't in the mood to take on more staff. Clearly the jitters about the European debt crisis have taken their toll together with uninformed media stories about the presumed end of the mining boom. In this sort of environment many businesses have chosen to work on getting as much as they can out of existing staff, rather than take on new workers. Clearly, much can change in a short space of time. The US economy is on the improve; the European debt crisis has settled (at least for now); and both home and share prices have been rising. Further, the Reserve Bank injected fresh stimulus into the economy at the start of the month, cutting the cash rate target by another quarter of a per cent."
Looking ahead, the Reserve Bank will have a busy week with a number of speeches and meetings expected to take place. On Thursday the monthly employment report will be issued locally and is expected to be one of the focal areas for the market. A small 6,000 lift in the number of jobs is forecast while the unemployment is likely to hover between 5.1 and 5.2 per cent.
No major market moving economic news was issued in the region today. The Japanese sharemarket was closed due to a public holiday while the Chinese markets traded for the first time in six trading sessions. Shares in Shanghai fell by 0.56 per cent or 11.74 pts to 2074.41. Hong Kong's Hang Seng slipped by 0.73 per cent while stocks in Taiwan dropped by 0.97 per cent or 74 pts to 7615.89.
In Europe tonight, Finance Ministers will be congregating in an attempt to find a solution to Spain's problems. This is sure to attract market attention and some debate. Also tonight, the Sentix Investor Confidence report will be released in addition to German Industrial Production numbers.
No major data is due for release this evening due to the Columbus Day public holiday in the U.S. Both government offices and bond markets will not be open for trade; however the share market will remain open for business. It is likely to be relatively quiet overnight due to the public holiday though. Looking ahead, the U.S Beige Book is going to be one of the highlights in the U.S this week.
Volume of shares traded came in at 1.51 billion today, worth just $3.36 billion. 412 shares were up, 496 were weaker and 350 ended unchanged.
At 4.30pm (AEST) on the Sydney Futures Exchange, the ASX24 futures contract is down 0.18 per cent or 8 pts to 4471.
Due to daylight savings, most major European markets are now trading between 5pm (AEST) and 1.30am (AEST). Futures are currently pointing to a weaker start to trade tonight.
U.S futures are pointing to a lower start tonight also. Due to daylight savings taking place in the second week of March in North America and the end of daylight savings in Australia, U.S markets will now be trading between 11.30pm (AEST) and 6am (AEST).
Turning to currencies, the Australian dollar (AUD) gained a bit of ground against the greenback throughout the day but is still around US2 cents lower against the U.S dollar now than last Monday. The AUD now buys US101.6 cents. Our currency is trading at £63.2 pence and €78.3 cents.
Australia is a commodity based economy, with commodities in general accounting for almost 80 pct of all our exports over the past nine months. In essence, when the going gets tough globally, there is fear of less demand for our commodities, which tends to result in a weaker AUD.
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