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Local sector falls: Afternoon market insights

The Australian market fell slightly after mixed leads from the northern hemisphere overnight.

There was good housing and earnings news from the US, but Spain’s credit downgrade soured the mood of investors. The Australian S&P/ASX200 rose in the first hour before finishing slightly down. The reporting of decreased profit for Seven West Media, JB Hi-Fi and Macquarie Bank weighed on the markets – despite most analysts predicting a rate cut next Tuesday.

“Electricity, water and sewage costs all rose at over 9% year-on-year, and housing rents also ran at elevated rates. This reflects more persistent factors, such as low productivity growth, underinvestment in infrastructure and overregulation in some areas. These factors should make the RBA cautious about cutting rates too far or too aggressively,” said Paul Bloxham, chief economist HSBC Bank (Australia and New Zealand).

The S&P/ASX200 was down 0.14% to 4369. The All Ordinaries Index was down 0.12% to 4439.80.

The day’s winners

ResMed (ASX: RMD) was up 4.38% to $3.21 at 2.20pm. ResMed develops and manufactures medical products for the treatment and management of respiratory disorders. The company announced a 20% increase in income for the first quarter.

Macquarie Group’s (ASX: MQG) share price was up 3.90% to $29.54 at 2.30pm. Macquarie bank’s profit fell 24% for the full year to March 31. The Sydney-based merchant bank reported a $730 million net profit for the year.

The day’s losers

JB Hi-Fi (ASX: JBH) was down 6.07% to $10.06. JB Hi-Fi announced it expects profits to fall this financial year as its margins are cut by discounting.

FKP Property Group (ASX: FKP) was down 4.85% to $0.49 at 2.35pm. FKP is an Australian property development, construction and investment group.

Sector movers

The strongest sector was the All Ordinaries Gold (Sub-Industry) which was up 1.04% to 5607.90.

The weakest sector was the S&P/ASX 200 Health Care (Sector) index which was down 0.82% to 8939.20 at 3pm.

Currency

One Australian dollar was buying $US1.0378 at 2.40pm.

Asia

Asian markets rose on the back of good US housing data and after the Bank of Japan increased its asset-purchase fund to 40 trillion yen ($476 billion) to support the economy. The rise in Asian stock markets came despite Standard & Poor’s cut to Spain’s credit rating overnight.

Samsung posted better-than-expected earnings after passing Nokia as the world’s biggest mobile phone manufacturer in the first quarter. The MSCI Asia Pacific Index (MXAP) gained 0.4%to 124.81 in Tokyo.

Japan’s NIKKEI 225 was up 0.47% to 9606.70 at 3pm.

Hong Kong’s Hang Seng was  up 0.50% to 20914.60.

Japanese government reports showed growth in the world’s third-largest economy may be slowing. Industrial production rose less than expected in March and household spending missed estimates. The Bank of Japan added stimulus for the second time in three months, weakening the yen and boosting Japanese exporters.

“The market is more than satisfied,” Kenichi Kubo, a senior fund manager at Tokio Marine Asset Management, told Bloomberg. Tokio oversees 5.4 trillion yen. “The market didn’t expect the bank to expand its purchases of ETFs and other risk assets.”

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