Australian Stock Market Leads - 03/21/2012

By : Subscribe to Christine's | March 21, 2012 5:17 AM IST

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A slow, lackadaisical trading is anticipated on Wednesday's Australian stock market as a grueling impact of low commodity exports further hammered down potential export earnings in correlation with China's weakening demand.

Analysts said, although the situation has been there for months, it is only now that the miners have acknowledged the fact that a single-digit export growth for the commodities sector could indeed hamper earnings this year.

The statement of BHP chairman Jacques Nasser citing the riveting impact of China's low demand for steel and related products that Australia directly exports triggered the decline in confidence during Tuesday's late afternoon trade.

In the U.S., although, there were bright spots in the housing market, this did not push the markets to perform better.

According to IG Markets analyst Stan Shamu, in US trade, markets declined on renewed China growth concerns.

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"This saw US markets come off four-year highs, as risk appetite slumped. Attention has now well and truly swung back from Europe to Asia and China in particular. The Dow Jones Industrial Average was down 0.5% at 13170. The S&P was 0.3% lower at 1406 and the NASDAQ shed 0.1% to finish at 3074. European markets had an even tougher session with the FTSE, CAC and DAX all slumping over 1% each," Mr. Shamu notes.

CMC Markets and IG Markets agree that "the doubts cast whether China's economy could indeed maneuver a soft landing will be a dominant question hounding over the markets."

Another dominating sentiment is for investors to take in early profits to compensate for this doubt.

With the pessimistic leads pointing to a market slip in the early morning trades, the first-half results of the David Jones (ASX:DJS) did not make much of an impact as the company continues to lag behind its peers in the online retail market earnings.

According to Ben Le Brun of OptionsXpress by Charles Schwab, DJS's plan to move forward with opening six new stores may create better sales and earnings in the medium to long term.

"Growing their store network through opening 6 new stores is another focal point for the company. DJs point out that 17/25 of the top retailers in the US are bricks and mortar retailers, so growing store numbers makes sense to them. They are also working on strengthening their core business through offering the best local and international brands and returning better sales margins, this maybe through better negotiations on pricing with their wholesalers," Mr Le Brun says.

He adds: "The financial services business confirmed a story that their credit card earnings were suffering in the poor trading conditions and that we could see the EBIT contribution halved when their alliance with AMEX converts to a share of underlying profits next year. This will be an area of grave concern for markets this morning."

FROM IG MARKETS:

Market

Price at 8:30am AEST

Change Since Australian Market Close

Percentage Change

AUD/USD

1.0476

-0.0094

-0.89%

ASX (cash)

4253

-22

-0.51%

US DOW (cash)

13178

-43

-0.33%

US S&P (cash)

1407.0

-2.5

-0.18%

UK FTSE (cash)

5895.0

-61

-1.02%

German DAX (cash)

7066.0

-100

-1.40%

Japan 225 (cash)

10118

-24

-0.24%

Rio Tinto Plc (London)

34.65

-1.50

-4.15%

BHP Billiton Plc (London)

19.65

-0.83

-4.05%

BHP Billiton Ltd. ADR (US) (AUD)

34.85

-0.46

-1.30%

US Light Crude Oil (May)

106.35

-1.55

-1.44%

Gold (spot)

1651.0

-6.0

-0.36%

Aluminium (London)

2245.00

-30

-1.32%

Copper (London)

8430.00

-140

-1.63%

Nickel (London)

19050.00

0

0.00%

Zinc (London)

2035.00

-43

-2.07%

RBA Cash Rate to be decreased by 25bp (Apr) (%)

19.00

0

0.00%

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities.  The levels quoted in this email are the latest tradeable price for each market.  The net change for each market is referenced from the corresponding tradeable level at yesterday's close of the ASX.  These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets. 

Please contact IG Markets if you require market commentary or the latest dealing price.

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