Australian Stock Market Report –Afternoon August 7, 2014
By Steven Daghlian, CommSec Market Analyst | August 7, 2014 7:04 PM EST
The Australian sharemarket fell for the fifth day; its longest losing streak in eight months. Weaker than expected employment figures and falls in European markets overnight were drivers. The All Ordinaries Index (XAO) fell by 0.1 per cent; however managed to close just above a key level at 5500.7.
300 jobs were shed last month in Australia according to the latest monthly employment statistics today. The unemployment rate rose from 6 per cent to a 12-year high of 6.4 per cent. The market was expecting the creation of around 13,000 jobs. Keep in mind that all the job losses were part-time jobs and that 14,500 full-time positions were created. The shift to full-time work is continuing, with over 109,000 positions added this calendar year. Interest rates are likely to remain steady for the time being, with the Reserve Bank (RBA) probably more than happy to sit on the sidelines and not lift rates just yet.
Today was a busy day for earnings, with both Rio Tinto (RIO) and Tabcorp (TAH) issuing their numbers. TAH, the gaming company behind Keno and TAB rose by 3.3 per cent after announcing a 3 per cent rise in annual profit to $129.9 million. This was in-line with expectations while revenue fell. TAH generated $25 million from the World Cup; however legal battles held profit back slightly.
Australia's largest iron ore producer Rio Tinto (RIO) reported a 21 per cent rise in half year profit to US$5.1 billion after the market close. This was approximately $650 million ahead of market forecasts. It is ahead of schedule with its cost cutting program and its iron ore division performed strongly. Despite a 30 per cent slump in the price of iron ore since January, a rise in volumes helped lift earnings in its ore unit by 10 per cent. 91 per cent of RIO's earnings are generated from its iron ore division. Copper, aluminium and its energy products made up a negligible amount.
The major banks were the biggest drags on trade, with the big four falling by as much as 0.5 per cent. Gold stocks were standouts thanks to safe haven buying of the metal. Newcrest Mining (NCM) rose by 4.9 per cent today.
The Australian dollar fell to a one-week low and currently buys
US92.6c. The reduced likelihood of a rate hike this year pushed our currency lower. In the region, Japan's Nikkei rose by 0.5 per cent while shares in China, Hong Kong and South Korea all finished in the red.
Looking ahead, tonight both the European Central Bank and the Bank of England will be holding their monthly monetary policy meetings. The ECB is likely to keep rates steady at 0.15 per cent while the BoE is likely to do the same with its rates; leaving them at 0.5 per cent. The BoE's meeting is in particular likely to be a non-event.
Tomorrow in Australia and the region, both News Corp and REA Group (the company behind www.realestate.com.au) will release profit results. The RBA's Statement on Monetary Policy will be out at 11.30am (AEST) and China will issue its trade balance outcome for July. A US$31.6 billion is expected by the market.
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