Despite Wall Street gains, the Australian share market retreated from yesterdays boisterous gains to open lower and is 0.4 per cent down at noon, with most major sectors trading in negative territory, headed by Materials, which is unlikely to reverse early performance following a slow-down in Chinese manufacturing activity.
The S&P/ASX 200 index is 22 points down at 5,169. On the futures market the SPI is 8 points lower.
Economic news
Australia’s manufacturing sector declined at its fastest rate in four years, according to the Australian Industry Group’s performance of manufacturing index (PMI). The index dropped 7.7 points in April to read 36.7, with the decline attributed to the strong Australian dollar and high labour and energy costs.
The Housing Industry association says new home sales continue to recover modestly after lfting by 4.2 per cent in March. Key indications of the recovery came in detached house sales, lifting by 3.9 per cent on the back of a 4 per cent decline in February, and multi-unit sales, growing by 5.6 per cent after an 11 per cent drop the previous month.
On the back of the slight sales recovery comes less welcome property sector news, with the RP Data-Rismark Home Value Index reversing its first quarter growth and dropping 0.5 per cent to a median price of $485 thousand in April, the first monthly decline since last December, representing a slight stumble along the path to recovery according to RP Data analysts.
Finally, Chinese Manufacturing slowed above expectations in April, according to the official purchasing manger’s index. The reading fell to 50.6, coming down from the previous months read of 50.9.
Company news
Telstra Corporation Limited
(ASX:TLS) has re-iterated its full year guidance, anticipating low single digit earnings and income growth.
The telco says retention of its guidance is driven by investment in its 4G mobile network, with cash flow expected to come in between $4.75 and $5.25 billion. Shares in Telstra are trading up 0.3 per cent at $5.00.
Kathmandu Holdings Limited
(ASX:KMD) shares are stronger in early trade after the retailer announced a 13 per cent lift in third quarter sales. The company says it retained momentum in revenue growth from the first half of the financial year and is confident of a strong full year performance, however remained mute on issuing specific annual guidance. Shares in Kathmandu are trading up 7.98 per cent at $2.03.
Best and worst performers The best performing sector is Telco services gaining 7 points to 1,724. Shares in TPG Telecom Limited
(ASX:TPM) have risen 1.38 per cent and trading at $3.67. Shares in M2 Telecommunications Group Limited
(ASX:MTU) and Telstra Corporation Limited
(ASX:TLS) are also stronger.
The worst performing sector is Materials, falling 147 points to 9,086. Shares in Medusa Mining Limited
(ASX:MML) have fallen 5.5 per cent, trading at $3.09. Shares in PanAust Limited
(ASX:PNA) and Mount Gibson Iron Limited
(ASX:MGX)are also lower.
Gold and the dollar
Gold is trading at $US1,473 an ounce and the Australian dollar is buying $US1.037.
