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The Australian sharemarket had its worst day of 2012 today, with the All Ordinaries Index (XAO) slumping by 1.6 pct or 70.2 pts to 4257.2. It was also one of the busiest days on the local market this month with around $5.8 billion worth of shares exchanging hands throughout the session.
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Qantas (QAN) was one of the best performers today after recording some better than expected profit results in the previous half. The airline has said that around 500 jobs will be impacted/cut as part of a restructure. QAN shares rose 6.09 pct or 9.5 cents to $1.65.
Struggling surfwear retailer, Billabong (BBG) has received a $766 million takeover bid from what is believed to be a U.S private equity firm. The retailer is currently worth around $455 million on the local sharemarket (number of shares on issue multiplied by its current share price). BBG shares have slumped by 65 pct over the past six months however were placed in a trading halt today at the request of the company. This is pending the release of an announcement by the business.
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The big four banks lost ground today, with Westpac (WBC) the worst following a trading update. WBS shares slumped by 3.53 pct or 74 cents to $20.22, ANZ Banking Group (ANZ) dropped by 2.3 pct or 50 cents to $21.20, National Australia Bank (NAB) lost 1.82 pct or 42 cents to $22.63 while Commonwealth Bank (CBA) fell 0.76 pct or 38 cents to $49.85.
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The miners were the worst performers of the day and fell by over 2 pct as a sector. Rio Tinto (RIO) fell 2.31 pct or $1.59 to $67.28, BHP Billiton (BHP) dropped 2.22 pct or 80 cents to $35.30 while iron ore miner, Fortescue Metals (FMG) slumped by 3.98 pct or 22 cents to $5.31.
Today was the busiest day of the reporting season to date. The ASX Limited (ASX), the operator of Australia´s main sharemarket posted a $175.6 million profit in 1H12 (July to December 2011). This was largely in-line with market expectations but the company has signalled it expects market conditions to remain challenging. The ASX has essentially enjoyed a monopoly of Asia Pacific´s fourth largest sharemarket for more than 20 years, however now has new competition to deal with. Chi-X is an alternative market which was launched last year. Its introduction is yet to impact ASX´s bottom line significantly.
The interim dividend of $0.928 share will be paid to eligible shareholders on March 21 and is in-line with forecasts. This is the first profit result with Elmer Funke Kupper, the company´s new Chief Executive at the reigns. ASX shares edged higher by 0.23 pct or 7 cents to $30.40.
Wesfarmers (WES), a diversified company with interests in everything from coal mining to home improvement businesses delivered a lower than expected 1H12 (July to December 2011) profit result of $1.17 billion. Close to 60% of Wesfarmers´ revenue came from its Coles supermarket business, with earnings from Coles rising by 14.1% over the period. Around 30% ($8.8 billion) in sales can be attributed to its home improvement and department store businesses (including Target and Kmart). Its insurance division was impacted negatively by a high level of catastrophe claims from natural disasters such as the 2011 Christchurch earthquake.
WES has declared a fully-franked interim dividend of 70 cents a share, which will be paid to eligible shareholders on March 30. Looking ahead, WES said it remains optimistic for it retails businesses, but expects conditions to remain challenging over the short term. WES shares fell 2.55 pct or 76 cents to $29.09 today.
Wealth manager, AMP Limited (AMP) posted a net profit of $688 million for the full year (Jan to Dec 2011). This was short of market expectations and was 11.2% lower than in the corresponding period last year. It is pertinent to point out that this result also includes the M&A transaction and integration costs relating to its merger with AXA on March 30, 2011. AMP will pay out a 14 cent a share final dividend to eligible shareholders on April 5. This takes the full year dividend payout to $0.29 a share, which is largely in-line with market forecasts.
Looking ahead, the wealth manager has revised its dividend target payout ratio from a previous 75%-85%, down to 70%-80% of its earnings. This is to meet AMP´s capital requirements for its AXA business. This essentially means that it will be reserving less of its profits to distribute to shareholders. AMP shares have gained around 7.8% this calendar year. No guidance was given for the FY12 (Jan to Dec 2012). AMP shares fell 2.28 pct or 10 cents to $4.29 today.
On the economic front today, a report showed that there were 46,300 jobs created in January, while the unemployment rate improved from 5.2 pct to 5.1 pct. This was significantly better than the market's expectations that 10,000 jobs were created last month.
It is important not to be blinded by one month of positive employment numbers however. Commsec Economist, Savanth Sebastian said that "At first glance the latest employment figures are heartening - a pickup in jobs across the economy. But the result needs to be put into perspective. The job losses in December were revised higher to show almost 36,000 positions were cut, and in effect the January result just negates those losses. What is clear is that the labour market is going sideways. Yes it was encouraging that employment grew in January but looking forward a sustained pickup in employment will be needed to justify a turnaround in the fortunes of job seekers."
