australian stocks fall for the second successive session on profit taking 999162015

The ASX lost ground for the second day in a row on tired bull liquidation and profit-booking. Investors also turned cautious following data out of China that showed inflation in the country fell to a five-year low in January, and the continuing uncertainty surrounding Greece’s standoff with international creditors and a potential default.

“Concerns about the future of Greece in the eurozone and weaker than expected Chinese trade numbers from a few days ago have weighed on global markets,” said CommSec market analyst Steven Daghlian, as quoted by Sky News. “Our energy sector and banks are down. They are certainly holding the market back.”

However, in another view, the sharp bull move triggered by the RBA’s rate cut might have run ahead of itself, and the correction was therefore welcome and necessary to build a base for the next rally.

Indices and sectors

The benchmark S&P/ASX 200 ended down by 14.3 points, or 0.2 per cent, at 5,800.6, while the broader All Ordinaries index fell 12.7 points, or 0.2 per cent, to 5,757.4.

The best performing sectors were consumer discretionary (+0.94 per cent), and real estate investment trusts (+0.31 per cent). The major losing sectors were information technology (-0.87 per cent), energy (-0.79 per cent) and healthcare (-0.48 per cent).

Stocks

Investors took profits off the table at the big four banks which had led the record-breaking rally in Australian stocks in recent sessions. Commonwealth Bank of Australia (ASX:CBA) was down 0.4 per cent to AU$92.59, Westpac Banking Corp (ASX:WBC) lost 0.7 per cent to AU$36.81, Australia and New Zealand Banking Group (ASX:ANZ) slipped 0.2 per cent to AU$34.90 and National Australia Bank Ltd (ASX:NAB) fell 0.5 per cent to AU$37.03.

The Commonwealth Bank of Australia (ASX:CBA) just reported this morning that its first-half cash profit jumped 8 per cent to AU$4.62 billion, according to The Bull. The bank increased its dividend to shareholders by AU$0.15 to AU$1.98 per share.

In the resource sector, mining companies shrugged off a 2.1 per cent decline in the iron ore price to US$61.20 per tonne. BHP Billiton Ltd (ASX:BHP) gained 0.51 per cent to AU$31.39, Rio Tinto Ltd (ASX:RIO) was up 0.6 per cent to AU$60.70, while Fortescue Metals Group Ltd (ASX:FMG) slipped 0.40 per cent to AU$2.49. BC Iron Ltd (ASX:BCI) plunged 5.79 per cent to AU$0.570; the second-biggest loser yesterday on the S&P/ASX 200.

Gold miners rebounded as gold prices appeared to take a break from their recent downtrend. Northern Star Resources Ltd (ASX:NST) was up 2.62 per cent per cent to AU$1.96 and Newcrest Mining Ltd (ASX:NCM) gained 1.73 per cent per cent to AU$14.12.

Earthmoving and mining equipment company Bradken Ltd (ASX:BKN) reported a loss of AU$92.6 million in the six months ended December and cancelled its interim dividend, as the downturn in mining investment took a heavy toll on its operations, according to SBS.com. The stock was the biggest loser on the S&P/ASX 200, crashing 22.22 per cent to AU$2.45.

In energy stocks, Woodside Petroleum Ltd (ASX:WPL) fell 1.32 per cent to AU$35.20, Santos Ltd (ASX:STO) declined 1.36 per cent to AU$7.97 and Oil Search Ltd (ASX:OSH) gave up 0.84 per cent to close at AU$8.22. In overnight trading Tuesday, US oil for March delivery crashed 5.4 per cent to US$50.02 a barrel on the Nymex, while the international Brent benchmark crude slipped 3.3 per cent to US$56.43, on fresh fears of a global glut.

Retailers were not spared by investors either, Woolworths Ltd (ASX:WOW) lost 0.1 per cent to AU$32.29 and Wesfarmers Ltd (ASX:WES) was down 0.6 per cent to AU$44.17.

Blue-chip Telstra Corporation Ltd (ASX:TLS) remained unchanged at AU$6.51.

Economic news, currency and insight

In a monthly report released Tuesday the International Energy Agency said commercial petroleum inventories held by OECD members could spiral to all-time highs by the middle of this year, according to the Wall Street Journal. Analysts expect the US Energy Information Administration to report Wednesday an increase in US crude oil inventories by 4 million barrels for the week ended February 6.

On Tuesday, two widely watched surveys showed that business and consumer confidence were at a low ebb in the country, according to Sky News.

The ANZ-Roy Morgan Research consumer confidence index declined for a third successive week, falling 0.7 points to 111.7 last week and trending just below the long-run average. “Confidence in the economic outlook over the next year (-3.6 per cent) and next five years (-2.6 per cent) both declined,” said ANZ chief economist, Warren Hogan. “The fall was likely driven by the weakening growth outlook which prompted the RBA to cut rates and government instability which may have reduced confidence in the medium-term economic outlook,” he added, according to MacroBusiness.com.

The National Australia Bank business confidence index gained only one point to +3 points in January and is also below its long-run average. "The trend in business conditions has lost momentum," said NAB's chief economist Alan Oster. "Conditions have fallen for three consecutive months, with the index dropping another half a point in January (unchanged when rounded) to 2 index points – below the long-run monthly survey average of 4 points."

Data out Tuesday from China’s National Bureau of Statistics showed that inflation fell to a five-year low in January, sparking expectations that its government may respond with more stimulus measures to ward off fears of deflation. The country’s consumer-price index rose just 0.8 per cent on year in January, down from an already low 1.5 per cent rise on year in December, and less than analysts’ expectations of a rise of 0.9 per cent, according to the Wall Street Journal.

At least 36 Australian companies which had associated entities in Switzerland, and may have been engaged in tax evasion worth billions of dollars, have been identified by the Australian Taxation Office (ATO), says The Australian. The ATO revealed for the first time that it had a list of 261 Australian taxpayers with HSBC Swiss bank accounts and probably originated from former HSBC employee Herve Falciani. The bulk of the 36 Australian companies are said to be in the resources sector.