Article / 12 November 2014 at 7:33 GMT

Australian Market Wrap: Materials lead pullback, bank shares slip

Trading Desk / Saxo Capital Markets
Australia

  • Materials led the way in the market pullback today
  • Several smaller miners reached lows for the year
  • Share prices tumbled for retailer Myer and share registry firm Computershare

By Saxo Capital Markets Australia

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There was a decent pullback in Australian markets today, contributed by all sectors in the exchange. With little to go off from the US markets as they celebrated Veterans Day, it appeared that the recently outperforming market used this opportunity to let off some steam.

The XJO closed down 54 points or 0.98% to 5463.10 with materials leading the fall. BHP Billiton dropped 2.84% to 33.20, Rio Tinto was 1.82% closing 59.41 and Fortescue Metals closed 1.99% lower at $2.96.

Big four down

Our financials also slipped with Commonwealth Bank of Australia leading the charge down 1.39% to $81.85. ANZ Bank gave up 0.92%, Westpac was down 0.89% and National Australia Bank was off 0.88%

Among the small miners, Fortescue Metals Group, Atlas Iron, Mt Gibson, Arrium and BC Iron all reached 2014 lows, with several stocks suffering double-digit percentage drops today. Atlas has plunged 14.3% to 21 cents, BC Iron dived 10.4% to 77.5 cents, Mt Gibson has lost 4.7% to 40.5 cents and Arrium fell 3.3% to 29 cents. Fortescue closed below the $3-mark for the first time this year, dropping 2% to $2.96.

Aurizon (AZJ) held their AGM today and in a trading session that was awash with red, The Board must be pleased to see it was the only performer of the day closing up 2.13% to $4.80. Key Financial notes to take from their report are: Underlying EBIT up 13%; NPAT up 7%; EBIT profit margin now at 22% , up from 6% when the company listed in 2010; record tonnage was shipped by the rail freight operator, and dividend total payout has risen by 34%.


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Myer executives will be hoping for strong Christmas sales for the Australian retail chain following today's disappointing results and share price slide. Photo: Thinkstock
 

Retailer share slide

Retail giant Myer (MYR) today gave a market update on first quarter total sales. Results fell well short of market expectations, and shares in Myer plummeted 7.37% to $1.745. Myer reported a total sales increase of 0.1% to $691.6 million. Notably all highlights mentioned were in words and no numbers. Furthermore, any gains that were added after the positive consumer consumptions figures last week were completely wiped out as Myer failed to capture this lift. On a technical note, Myer is approaching its record closing low of $1.605 from June 2012.

Computershare (CPU), Australia’s largest IT company specializing in shareholder administration, was sold off heavily from the results of its annual general meeting, with a 5.01% fall to $11.56. Key positive figures reported in the share registry company's 2014 financial year were as follows: management EPS up 9.8%; dividend payment 3.5% higher; total expenses down 7.1% and net profit after non-controlling interest up by a healthy 60.1%.

However it was the company's forward looking statement that concerned the market. Key points where: Computershare is tracking to plan although the company expects management EPS in the first half of 2015 to be down year on year; and the operating environment has softened since the US dollar has strengthened. The outlook assumes that equity, foreign exchange and interest rates do not change.

The SPI had its biggest sell off since early October, as the big four banks fell by 1% and materials sector dropped by 2%. The SPI has been outperforming other markets recently and today it finally looks to have lost the momentum. Opening as high as 5,517 it sold off to intraday lows of 5,458. Key resistance will now be at 5,500 and further downside pressure remains below this resistance.

The AUDUSD's consolidation from a temporary low of 0.8539  is still in progress, and further recovery cannot be ruled out. But we expect upside to be limited to key resistance at 0.8761, as the US dollar is still bullish and trading in an uptrend. A breaking out from this resistance level is needed to signal further strength.

– Edited by Robert Ryan

Australian Market Wrap is compiled by the Sydney trading desk at Saxo Capital Markets.  Join the conversation below to be a part of the social trading phenomena.

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