Australian equity markets flat: Afternoon market insights

Australian equity markets were flat today, rising only slightly despite positive leads from the US overnight and the big cut in the cash rate yesterday. Despite all the calls that the rate cut was needed to make the dollar fall, the Aussie dollar rose today.

“The reduction in yield on the AUD could quite easily be compensated over coming weeks if US equities keep tracking to new multi-year highs, as the AUD is still likely to be a beneficiary of any improvement in trading confidence globally,” says Tim Waterer, CMC Markets senior trader.

“Everything is relative and despite the fairly drastic cut, 3.75% is still head and shoulders above the pack. This could see the AUD head in the direction of 1.0450 over the coming week if sour economic data does not derail the run on US equities.”

Waterer said the Australian sharemarket had what could be best described as a mid-week misfire.

“The local index has had an innocuous day at best, despite the RBA wielding the axe on rates and the solid offshore lead thanks to global PMI data holding firm,” Waterer said.

The S&P/ASX200 was up 0.18% to 4437.30. The All Ordinaries Index was also up 0.17% to 4504.80.

The Spanish Government will try to sell more three and five-year bonds tonight AEST.

“Concerns about Europe’s debt crisis is simmering as Spain’s fiscal situation has yet to be resolved,” Takuya Kawabata, a researcher at Gaitame.com, Japan’s largest currency-margin company, told Bloomberg. “People are reluctant to take risk aggressively.”

The day’s winners

Treasury Wine Estates (ASX: TWE) was up 3.15% to $4.59 at 2.30pm. Treasury Wine Estates is a global wine company established in the 1840s. It has a portfolio of luxury, premium and budget wines. The company sells well-known brands including Penfolds, Rosemount, Lindeman’s, Wolf Blass and Seppelt. It has over 11,000 hectares of vineyards and sells over 33 million cases of wine annually. TWE employs more than 3,500 people in 12 countries.

Brambles (ASX: BXB) was up 2.90% to $7.46 at 2.30pm. The world’s biggest provider of wooden storage pallets employs 17,000 people in more than 50 countries. Today it unveiled a 33% rise in sales results for the nine months ending March 31, and reported sales revenue of US$3.56 billion ($AU3.44 billion).

Importantly for investors it also confirmed its full-year profit guidance sending the stock higher.

The day’s losers

APA Group (ASX: APA) was down 7.02 % to $1.562 at 3pm. APA is Australia’s largest natural gas infrastructure business, owning and/or operating approximately $9 billion of energy infrastructure pipelines spanning every state and territory in mainland Australia, delivering about half of the nation’s gas usage.

JB Hi-Fi (ASX: JBH) was down 3.72 % to $9.58 at 2.35pm. The retail chain was established in 1974 by John Barbuto (JB), trading from a single store in East Keilor, Victoria. His philosophy was to deliver a specialist range of Hi-Fi and recorded music at Australia’s lowest prices. In 2000 JB Hi-Fi was purchased by private equity bankers and senior management with the aim of taking the successful model nationally.

Sector movers

The strongest sector was the S&P/ASX 200 Healthcare (Sector), which was up 1.13% to 9131.80.

The weakest sector was the S&P/ASX 200 Utilities (Sector) index, which was down 1.98% to 4794.7 at 2.50pm.

Currency

The Australian dollar was buying $US1.0343 at 3pm.

Asia

Asian markets rose, led by mainland China and Taiwan. The South Korean won rose to the highest rate in almost a month. The MSCI Asia Pacific Index (MXAP) gained 0.6% as of 12:41 pm in Tokyo, while the Taiex Index (TWSE) rose 1.8% and the Shanghai composite gauge was up a solid 1.6%.

Japan’s NIKKEI 225 was up 0.41%, or 38.21 points, to 9389.16 at 3pm AEST.

Hong Kong’s Hang Seng was also up 1.14% or 241.48 points to 21335.70.

The market was boosted by good manufacturing data out of the US and China.

“There’s no doubt that boosting production globally is positive for the Japanese economy,” Kiyoshi Ishigane, a Tokyo-based strategist at Mitsubishi UFJ Asset Management told Bloomberg. “Not only the US, but also China, Europe and others cannot manufacture products without importing key parts and machinery from Japan.”

The S&P/ASX200 was up 0.14% to 4435.70. The All Ordinaries Index was also up 0.14% to 4503.80.

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