australian stocks lose 0 6 per cent on profit booking and poor economic data 1075682015

The Australian share market made its downward intentions clear right out of the gate on Thursday. The benchmark S&P/ASX 200 plunged from its open of 5,944.90 to nearly 5,900 in the opening hour of trade as investors decided to take profits off the table following three straight days of gains. During the rest of the session every rally by the benchmark met with determined selling, and by around 15:00 the index was down to its lowest level of 5,900, a line in the sand that acted as significant support during the day.

Investors cold-shouldered several strong earnings reports, notably Qantas, which returned to the black in an impressive half yearly result. Disappointing economic data on capital expenditure and business confidence added to the selling pressure.

Indices and sectors

The benchmark S&P/ASX 200 fell 36.4 points, or 0.6 per cent, and closed at 5,908.5, while the broader All Ordinaries index was down 30.7 points, or 0.5 per cent, to 5,877.9.

The significant losing sectors were telecommunications (-2.12 per cent), real estate investment trusts (-1.38 per cent), information technology (-1.25 per cent) and industrials (-1.15 per cent). Energy (+0.04 per cent) was the only sector that ended with gains on the day.

Stocks

The major banks all ended in the red. Commonwealth Bank of Australia (ASX:CBA) fell 0.50 per cent to AU$90.42, Westpac Banking Corp (ASX:WBC) fell 0.53 per cent to AU$37.68 and Australia and New Zealand Banking Group (ASX:ANZ) and National Australia Bank Ltd (ASX:NAB) both were down 0.42 per cent each to AU$35.16 and AU$37.62 respectively.

Stocks in the energy sector were mixed. Woodside Petroleum Ltd (ASX:WPL) was down just 0.03 per cent to AU$34.90 and Oil Search Ltd (ASX:OSH) fell 0.24 per cent to AU$8.18. Santos Ltd (ASX:STO) rose 0.76 per cent to AU$7.95 and Origin Energy Ltd (ASX:ORG) was up 0.25 per cent to AU$12.18.

Amongst mining stocks, BHP Billiton Ltd (ASX:BHP) was up 0.18 per cent to AU$33.56, Rio Tinto Ltd (ASX:RIO) gained 0.19 per cent to AU$63.70, and Fortescue Metals Group Ltd (ASX:FMG) closed unchanged at AU$2.48. Junior iron ore miner Mount Gibson Iron Ltd (ASX:MGX) was down 2 per cent to AU$0.245, BC Iron Ltd (ASX:BCI) slipped 2.04 per cent to AU$0.480 and Atlas Iron Ltd (ASX:AGO) fell sharply by 5 per cent to AU$0.190. The latter was amongst the biggest losers on the S&P/ASX 200.

Airlines were in the limelight following the return to profit by Qantas Airways Ltd (ASX:QAN), which ended 1.42 per cent higher at AU$2.85. The national carrier delivered its best interim performance in four years, posting a statutory net profit of AU$203 million in the six months ended December 31, compared to a loss of AU$235 million in the same period last year. The airline swung to a profit after its massive transformation strategy paid off, as well as lower costs due to a weaker Australian dollar and much cheaper oil. The removal of the carbon tax added AU$59 million to the airlines underlying profit. "While fuel prices produced a modest benefit in the first half, we expect fuel costs for the full year to be no more than AU$4 billion at current prices – which will be a significant boost to the bottom line in the second half," said Chief Executive Alan Joyce, as quoted by the Business Spectator.

Telstra Corporation Ltd (ASX:TLS) slipped 2.32 per cent to AU$6.31 and helped the telecommunications sector post the biggest loss for the day.

Media and entertainment company Nine Entertainment Co Holdings Ltd (ASX:NEC) shot up 9.43 per cent to AU$2.03, the highest in three months, after the company tripled its first-half profit and proposed a share buyback worth AU$150 million. Net profit jumped to AU$90.98 million from AU$31.7 million in the year earlier, while revenues rose to AU$839.9 million from AU$802.7 million. “In what has been a difficult advertising market, Nine Entertainment has reported a solid result," said chief executive David Gyngell, as quoted by The Australian. "We again improved our revenue share and maintained our ratings leadership in all key advertiser demographics. We are confident about our schedule for 2015, and see a clear path to our 40 per cent revenue share target," he added. The stock was the top gainer on the S&P/ASX 200.

Building materials supplier and lime producer Adelaide Brighton Ltd (ASX:ABC) was the second highest gainer on the S&P/ASX 200, up 7.46 per cent to AU$4.18, after it declared that earning per share during the full year ended December 31 jumped a healthy 13.5 per cent to 26.9 cents, surpassing analysts’ expectations of 24.7 cents. Revenue from continuing operations rose 8.9 per cent to AU$1.4 billion.

Economic news, currency and insight

Figures released by the Australian Bureau of Statistics showed that mining led a 2.2 per cent fall in capital expenditure in the final three months of last year to AU$37.47 billion. The decline was much higher than the forecast of a fall of 1.6 per cent by analysts surveyed by Bloomberg, said The Australian. According to analysts, this was a significant pointer to the health of the economy and may encourage the Reserve Bank of Australia to cut interest rates again at its meeting on Tuesday.

Elsewhere, a National Australia Bank survey showed confidence levels among ASX 300 companies fell to their lowest point since the end of 2012, according to the Herald Sun. The survey found that confidence amongst Australia’s biggest corporations fell 13 points to -3 in the last quarter of 2014, below its long-run average. "Business conditions continue to show a patchwork economy," NAB chief economist, Alan Oster, said, adding that big business in Australia was losing confidence and this was therefore affecting medium-term growth.

The Australian dollar fell back to sub-78 cent levels after the US dollar recovered its stride on better-than-expected durable goods data according to The Australian. At 06:30 this morning (AEDT), the local unit was trading at 77.89 US cents, down from 78.47 cents on Thursday.

The local stock market is likely to open marginally higher considering the March ASX SPI 200 Index (AP) Futures was trading up by 7 points to 5,885.0 at 07:59 this morning (AEDT).