australian stocks fall for the third day running as csl roils sentiment 1003872015

The Australian stock market moved quickly into the black in the first half hour of trade on Wednesday but renewed selling dragged stocks well into negative territory by the late afternoon. In a bearish signal, the market closed just marginally above its worst levels of the day. This was the third straight day of losses for the market.

Investors sold into news from major stocks such as Commonwealth Bank of Australia (ASX:CBA) which issued an earnings report, as well as CSL Ltd (ASX:CSL) which released lower than expected profits and reduced guidance for the full year. Considering the host of earnings results now on the anvil, this trend does not augur well for the health of the market.

A fresh fall in oil prices damaged stocks in the resources sector, while Greek concerns continued to simmer.

Indices and sectors

The benchmark S&P/ASX 200 ended down by 31.5 points, or 0.5 per cent, to 5,769.1, while the broader All Ordinaries index fell 25.7 points, or 0.4 per cent, to 5,731.7.

The best performing sectors were utilities (+2.22 per cent), consumer discretionary (+0.40 per cent) and information technology (+0.39 per cent). The major losing sectors were healthcare (-4.05 per cent), energy (-2.39 per cent) and materials (-1.27 per cent).

Stocks

The losses in the healthcare sector were due mostly to the 7.8 per cent fall in CSL Ltd (ASX:CSL), Australia’s largest bio-pharma company, to AU$82.95. The market punished the company for reporting after-tax net profit of US$692 million (AU$534 million) against expectations of US$720 million, according to The Bull. For the year as a whole the company now expects net profit growth of 10 per cent versus its previous guidance of 12 per cent, mainly due to rising competition and higher costs. The stock ended up as the second largest loser on the S&P/ASX 200.

Amongst the major banks only Commonwealth Bank of Australia (ASX:CBA), which reported earnings yesterday, closed in the red by 0.79 per cent to AU$91.86. Westpac Banking Corp (ASX:WBC) gained 0.05 per cent to AU$36.83, Australia and New Zealand Banking Group (ASX:ANZ) was up 0.54 per cent to AU$35.09 and National Australia Bank Ltd (ASX:NAB) closed higher by 0.08 per cent to AU$37.06. Investors sold off Commonwealth Bank despite the bank’s report of an 8 per cent increase in cash profit to AU$4.62 billion, and a rise in revenue of 5 per cent amidst subdued market conditions.

In the mining space, BHP Billiton Ltd (ASX:BHP) plunged to 1.34 per cent to AU$30.97 while archrival Rio Tinto Ltd (ASX:RIO) fared worse, falling 1.48 per cent to AU$59.80. Fortescue Metals Group Ltd (ASX:FMG) was down 1.61 per cent to AU$2.45, Atlas Iron Ltd (ASX:AGO) declined 2.60 per cent to AU$0.185 and BC Iron Ltd (ASX:BCI) shed 1.75 per cent to AU$0.560.

In energy, Woodside Petroleum Ltd (ASX:WPL) slumped 2.95 per cent to AU$34.16, Santos Ltd (ASX:STO) was down 3.26 per cent to AU$7.71 and Oil Search Ltd (ASX:OSH) slipped 2.55 per cent to AU$8.01. Energy stocks were under pressure following four consecutive days of losses for the crude oil price due to oversupply and higher inventories.

Mining supplies and services provider Bradken Ltd (ASX:BKN) followed up on the previous session’s massive 22 per cent loss with another sharp fall of 12.65 per cent to AU$2.14 yesterday. The stock topped the S&P/ASX 200 losers list for the second day running. The company previously reported a large loss and cancelled its interim dividend.

Domino's Pizza Enterprises Ltd.(ASX:DMP) shot up 21.19 per cent to AU$33.00 after reporting a 44.2 per cent rise in half yearly profit due to solid store growth and digital innovation, according to Yahoo Finance. The stock topped the ASX 200 gainers' list.

According to a report just in from The Australian, Telstra Corporation Ltd (ASX:TLS) delivered another record half-year profit, beating analyst expectations. The company earned a net profit of AU$2.085 billion during the six months ended December 31, a jump of 22.4 per cent over the year prior, and above a Bloomberg survey expectation of AU$2.03 billion. It announced an interim dividend of AU$0.15 payable on March 27 to shareholders on record as at February 27. Yesterday, the stock fell 0.31 per cent to AU$6.49.

Economic news, currency and insight

The Australian Bureau of Statistics' December housing finance figures were ahead of expectations, with more consumers taking home loans, according to ABC.

New lending for residential properties surged to AU$30.6 billion in December, up 4.7 per cent on the previous month on a seasonally adjusted basis. That comprised AU$18 billion of loans by owner-occupiers (+3.8 per cent) and AU$12.6 billion of new lending to investors (+6 per cent). "We haven't seen this level of demand for home loans since October 2009," said Mortgage Choice spokeswoman Jessica Darnbrough, observing that, at 41 per cent, investors were now the biggest proportion of the national housing market on record.

The Westpac/Melbourne Institute Survey of Consumer Sentiment hit a 13-month high as rate cuts and cheap petrol boosted confidence. The index jumped 8 per cent in February to 100.7 from 93.2 in January, according to Macro Business. “This lift in confidence should allay any concerns that rate cuts, in the current environment of record low rates, can be a negative for confidence,” said Macro Business. “The idea that households would be unnerved by the implication that authorities might be responding to a surprise deterioration in economic circumstances seems to be strongly disputed by this result.”

The Australian dollar is trading weak on concerns surrounding an emergency eurozone meeting on the Greek crisis, according to news.com.au. At 06:30 this morning (AEDT), the local currency was trading at 77.15 US cents, down from 77.76 US cents on Wednesday.