The Australian share market sank at open but closed off the session’s low after the US Federal Reserve decided to continue to taper its quantitative easing program. America’s central bank moved in line with expectations but the move still trigged falls on Wall Street and on the local bourse.
While most sectors ended in the red telecommunications bucked the trend and gold continued to gain after getting a boost from the Fed’s announcement. Among the stocks production reports and earnings guidance continued to roll in with Treasury Wine Estates Limited
(ASX:TWE) tanking after issuing its profit warning.
Figures
The S&P/ASX 200 index fell 40.9 points to finish at 5,188.
The value of trades was $4.5 billion on volume of 721 million shares at the close of trade.
The top three stocks by value were BHP Billiton Limited
(ASX:BHP), Commonwealth Bank of Australia
(ASX:CBA) and Treasury Wine Estates Limited
(ASX:TWE).
On the futures market the SPI is 37 points lower.
China economic news
Manufacturing activity in the world’s second largest economy has again weakened. HSBC and Markit’s Purchasing Managers’ Index dropped to 49.5 in January from the preliminary read of 49.6, with both remaining below 50 which indicates contracting activity.
Australian economic news
The strength of Australia’s housing market has been highlighted with new home sales hitting a five-year high in 2013 and posting the first annual rise since 2008. The Housing Industry Association has reported new home sales jumped 14.4 per cent in 2013 from the year before.
Prices of imports and exports eased over the December quarter but remain stronger over 2013. The Australian Bureau of Statistics reported export prices eased 0.5 per cent and import prices eased 0.6 per cent in the December quarter, but both remain higher over 2013.
Company news
Fortescue Metals Group Limited
(ASX:FMG) has warned its full-year iron ore shipments will slip to the lower end of previous guidance due to weather problems. The Pilbara focussed iron ore miner now expects to export 127 million tonnes in fiscal 2014, down from an earlier forecast of between 127 million and 133 million tonnes. Fortescue’s quarterly report also revealed it shipped a record 28 million tonnes of iron ore in the last three months of 2013, up 43 per cent from 2012. Shares in Fortescue Metals Group fell 1.32 per cent to finish the session at $5.23.
Billabong International Limited’s
(ASX:BBG) shareholders have given the go-ahead for Oaktree Capital and Centerbidge Partners to take a 40.8 per cent stake in the company.The troubled surf-wear retailer’s shareholders today overwhelmingly approved a $135 million share issue to the US hedge funds.
Billabong chairman Ian Pollard says the finance will enable the company to complete its turnaround strategy. Shares in Billabong International dropped 4.03 per cent to finish the session at $0.59.
Treasury Wine Estates Limited’s
(ASX:TWE) profit warning trigged the stock to fall to today’s worst performer. The wine maker has cut its full year earnings forecast by $40 million due to a drop in sales volumes amid increasing competition.
Beach Energy Limited
(ASX:BPT) has boosted its output and capital expenditure guidance. The oil and gas explorer expects to improve annual production thanks to its Cooper Basin assets and has also lifted its forecast for annual CAPEX.
Nufarm Limited
(ASX:NUF) has scored a distribution deal with a subsidiary of Sumitomo Chemical Company. The agricultural chemical company will market and distribute Valent branded products for the US turf, ornamental and aquatics markets.
Navitas Limited
(ASX:NVT) has improved its interim profit by 3 per cent and affirmed annual guidance. The educational services provider generated a first half net profit of $36 million on the back of strength from its university program division.
Best and worst performers
Most sectors ended in the red except for telco services, adding 9.6 points to close at 1,784.
The worst performing sector was industrials, losing 55 points to close at 3,880 points.
The best performing stocks in the S&P/ASX 200 were gold miners with Beadell Resources Limited
(ASX:BDR) rising 4.96 per cent to close at $0.74. Shares in Evolution
(ASX:EVN) and Independence Group NL
(ASX:IGO) also closed higher.
The worst performing stock was Treasury Wine Estates Limited
(ASX:TWE), plunging 20 per cent to close at $3.64. Shares in Forge Group Limited
(ASX:FGE) and Mount Gibson Iron Limited
(ASX:MGX) also closed lower.
Commodities
Gold is buying $US1,263.53 an ounce.
Light crude is $0.05 lower at $US97.36 a barrel.
Currencies
The Australian dollar remains under $US0.88 following the US Federal Reserve’s announcement and is buying $US0.8728.
