Australian equity markets flat: Afternoon market insights

Australian equity markets were flat, with negative leads from the northern hemisphere overnight. The S&P/ASX200 was up and down like a rollercoaster today. The Australian industry sectors that fell included the gold, energy, information technology, metals and mining, minerals, materials, resources and utilities sectors. The sectors that rose included the consumer discretionary, financials, health care and consumer staples.

The S&P/ASX200 was flat, down only 0.05% to 4356.60. The All Ordinaries Index was also down slightly 0.13% to 4430.10.

“The materials and energy sector have underperformed today due to weaker commodity prices overnight and a rising US dollar. However, the Westpac first half result helped to give the banks reason to move higher,” said Ben Taylor, CMC Markets Sales Trader.

“Given the recently elevated level of the Aussie market and new problematic developments in Europe I’m very surprised that the Australian market has held its ground today. The European news overnight put another nail in the Eurozone coffin, the data only served to reconfirm my belief that we have not seen the worst out of the region.”

The day’s winners

Energy Resources of Australia (ASX: ERA) was up 10.30% to $1.82 at 3pm. Energy Resources of Australia is one of the largest uranium producers in the world. Ranger mine in the NT is one of only three mines in the world to produce in excess of 100,000 tonnes of uranium oxide used to generate electricity using nuclear energy, which produces minimal carbon emissions. It announced a few days ago it would start construction works on the Ranger 3 Deeps exploration decline at its Ranger mine.

Virgin Airways (ASX: VAH) was up 5.19% to 0.405 at 3pm. Virgin conducted its Macquarie investor conference where it announced it has increased its percentage of high-yield revenue, has focused its capacity growth of 10% (in 2012) in growth markets like regional and trans-continental Perth flights and has been able to dismantle entrenched monopoly markets like government and corporate business. The airline has international alliances operational with Etihad, Delta, Singapore, Hawaiian and Virgin Atlantic Airlines. It has a 75% hedge on fuel costs for 2012.

The day’s losers

Energy World Corporation (ASX: EWC) had fallen 9.82% to $0.505 by 2.37pm. EWC is an energy company engaged in the production and sale of power and natural gas in Asia and Australia.

Iress Market Technology (ASX: IRE) was down 5.42 % to $6.27 at 3.30pm. Iress provides trading tools to professional financial market participants. It released the chairman’s address saying it had made a profit of $89.1 million in 2011, up 2.9%, and purchased a South African company – Peresys.

Sector movers

The strongest sector was the S&P/ASX 200 Consumer Staples (Sector) which was up 2.06% to 1192.90.

The weakest sector was the Information Technology (Sector) which was down 1.20% to 535.2 at 3.30pm.

Currency

The Australian dollar fell today on concerns the global economy may be slowing. One Australian dollar was buying $US1.0298 at 3pm.

Asia

Asian markets fell after data showed a slowing of the service sector in China. China’s stocks declined from a seven-week high as overnight US and European jobs data renewed concerns the global economy is slowing. The MSCI Asia Pacific Excluding Japan Index (MXAPJ) lost 0.4% as of 11:46am Hong Kong time. The Hang Seng China Enterprises Index sank 1.6%.

South Korea’s Kospi index slid 0.4%. The Shanghai Composite Index fell 0.4%.

Japan’s markets are closed today and tomorrow for holidays.

Hong Kong’s Hang Seng was down 0.50% or 105.59 points to 21203.50.

Chinese banks fell after reports Singapore’s state-owned investment company Temasek sold $2.48 billion ($AU2.4 billion) of shares in Bank of China and China Construction Bank, according to documents obtained by Bloomberg. Bank of China fell 3.7% and China Construction Bank declined 3% in Hong Kong. The sales come less than a month after Temasek purchased $2.3 billion of shares in Industrial & Commercial Bank of China, the nation’s biggest lender from Goldman Sachs.

“The next big issue will be the slowing economic growth and how it affects the underlying stability for earnings growth in Asia,” Diane Lin, a fund manager who helps manage $1 billion in equities at Pengana Capital in Sydney told Bloomberg. “Europe will continue to remain the risk for global equity investors.”

The S&P/ASX200 was flat, down only 0.06% to 4433.10. The All Ordinaries Index was also down 0.15% to 4498.10.