Aust stocks lose 0.9% for the week
By a staff reporter
The Australian sharemarket inched down 0.9 per cent over the week, in which the Reserve Bank of Australia (RBA) raised interest rates for the second month in a row and increased its forecasts or the Australian economy.
But local shares were kept in check by mixed domestic economic data.
On the upside, house prices increased 4.2 per cent in September, manufacturing conditions remained strong and the services sector expanded for the first time in 19 months.
On the downside, trade deficit figures pointed to a subdued September quarter and retail sales numbers fell unexpectedly.
The TD Securities-Melbourne Institute inflation gauge fell in October, indicating the lowest rate of inflation in the gauge's seven year history, giving the RBA more scope to raise rates gradually.
All attention was on the RBA this week, after it became the first central bank in the world to increase rates for the second time this year, as well as raising estimates for the Australian economy for the next two years.
The benchmark S&P/ASX200 index lost 0.9 per cent to finish the week at 4,594.0 points, while the broader All Ordinaries index decreased 1.1 per cent to end at 4,604.4 points.
Its the first time in four months that the local sharemarket has booked two consecutive weekly losses.
"It’s too early to say whether the weak patch in shares seen over the last two weeks is over or not," AMP Capital chief economist Shane Oliver said.
"However, our assessment is that recent weakness is just a correction in a still rising trend and not the resumption of last year’s bear market," Mr Oliver said.
Resources
The major miners had slightly contrasting fortunes for the week.
BHP Billiton finished just 0.1 per cent lower at $37.40, while iron ore joint venture partner Rio Tinto firmed 1.9 per cent to $65.00.
Rio Tinto said late last week that it has doubled its planned capital spending for next year to at least $US5 billion ($A5.5 billion) after it cut debt and saw signs of economic recovery.
The miner also said on Sunday that mending its relationship with China, it's biggest customer, was a top priority, after tensions emerged in the wake of a failed $US19.5 billion ($A21.5 billion) tie-up agreement with Chinalco and the arrest of Rio Tinto employees on suspicion of corporate espionage.
Fellow iron ore miner Fortescue Metals Group dipped one per cent to $3.82, while Oz Minerals fell 2.1 per cent to $1.175.
Energy shares capped off a mixed week, with Woodside Petroleum inching up 0.4 per cent to $47.91, Oil Search climbing 1.2 per cent to $5.94, while Santos closed at $14.94 with a fall of 1.1 per cent.
Gold miners gained ground after the precious metal broke through $US1,100 for the first time. Newcrest Mining added 3.3 per cent to $34.08, Lihir Gold rose 8.5 per cent to $3.31, while Sino Gold climbed 9.7 per cent to $6.65.
Financials
The major banks had mixed results for the week. Commonwealth Bank of Australia firmed 0.9 per cent to $52.71 and Westpac Banking Corp rose 0.7 per cent to $26.55, while ANZ Banking Group lost 2.5 per cent to $13.53 and National Australia Bank subsided 3.7 per cent to $28.75.
Amongst the mid-tier banks, Bendigo and Adelaide Bank slipped 6.6 per cent to $8.50 and Bank of Queensland subsided 6.1 per cent to $11.60.
Investment giant Macquarie Group finished 0.8 per cent lower at $49.60.
Myer joins retailers on the ASX
Shares in Australia's largest department store Myer started trading after the company made a return to the Australian Securities Exchange in the wake of its $2.2 billion initial public placement. Selling the shares at $4.10, Myer stocks have yet to trade hands at that price, finishing the week eight per cent lower at $3.77.
Main rival David Jones closed out the week 2.1 per cent down at $5.47, after both companies released strong sales reports in the lead up to the all important Christmas trading period.
Elsewhere in the retail sector, JB Hi-Fi firmed one per cent to $21.00 and Harvey Norman shares ended the week at $4.11 after a gain of three per cent.
Supermarket giant Woolworths dipped 2.3 per cent to $27.97 and main rival Wesfarmers slid 5.9 per cent to $26.42.
Media stocks
Media giant News Corp said on Wednesday its operations are well placed after reporting an 11 per cent increased in first quarter profit.
Chairman and chief executive Rupert Murdoch also said the media group might not start charging readers this financial year to access content on the company's newspaper websites. News Corp shares ended the week 0.4 per cent stronger at $15.41, while its non-voting stock subsided 0.5 per cent to $13.15.
Elsewhere in the sector, Consolidated Media Holdings declined 2.3 per cent to $2.98, Fairfax ticked down 0.3 per cent to $1.605, Seven Network slipped 1.9 per cent to $6.35, Ten Network dipped 3.6 per cent to $3.20, while West Australian Newspapers Holdings finished the week at $7.81 with a rise of 4.4 per cent.
Company news
Toll road operator Transurban was the standout performer of the week, surging 21.7 per cent to $5.55 after the company rejected a $6.77 billion takeover offer from Canadian pension funds on Thursday. Analysts say investors could see a higher offer from the funds.
Construction company Leighton Holdings posted a 10 per cent jump in first-quarter revenue on Thursday, and reaffirmed its forecast for a full-year net profit of about $600 million.
Telstra Corp also reaffirmed its cash earnings guidance at its annual general meeting on Wednesday, where chairman Catherine Livingstone said the Australian telecommunications sector needs more investment, not more competition, as the federal government moves to split the telecommunication group's retail and wholesale businesses. Telstra shares lost 3.6 per cent to $3.20.
Telecom Corporation of New Zealand (Telecom NZ) increased its guidance for the 2010 financial year after booking a 9.5 per cent rise in first quarter profit on Friday. Telecom NZ shares lost 1.5 per cent to $2.009.
Qantas Airways shares lost 2.9 per cent to $2.64, as professional engineers voted to ban overtime and out of hours call-outs on Friday, arguing the airline has brought nothing to the table during wage negotiations.
Low cost rival Virgin Blue Holdings declined 7.9 per cent to 46.5 cents.
Transport and logistics company Toll Holdings sank 2.1 per cent to $8.39 after purchasing United Arab Emirates (UAE) freight company Logistic Distribution Systems (LDS) for an undisclosed sum on Friday.
Next week
In the coming week, investors will be looking for clues in housing finance data, job ads figures, business and consumer confidence, and the all important jobs data.
"Employment is likely to fall by around 10,000 after September’s strong 40,000 gain and this will probably push unemployment back up to 5.8 per cent, but leaving it in the range it has been in for more than six months now," AMP's Oliver said.
"It wouldn’t be surprising to see consumer confidence drop back a notch from near record highs on the back of the latest interest rate hike," he said.
When it comes to the sharemarket, Mr Oliver said there is still plenty of upside with many of investors sitting on the sidelines with cash in hand, while interest rates remain at very low levels.
"So while sharemarkets may remain somewhat bumpy in the short term our year end target for the Australian All Ords and ASX 200 indices remains 5000 and we see further solid gains through next year," Mr Oliver said.
IG Markets analyst Chris Weston said the Australian sharemarket is poised for a relatively flat open on Monday, despite a surprisingly gloomy jobs report from the US on Friday that showed unemployment had surpassed the psychologically important 10 per cent mark.
"The unemployment number at 10.2 per cent was a bit of a shocker but ultimately the US market closed up a couple of points which should be taken as a positive," Mr Weston said.
While he said the market looked set for a "lifeless Monday open", positive momentum towards the end of the completed week, and a comparatively poor performance to its global peers could lend support to the Australian bourse.
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