Investors trim holdings ahead of reporting season

THE Australian market ended lower as investors took profits ahead of the February profit reporting season.

THE Australian market ended lower as investors took profits ahead of the February profit reporting season.

Weaker consumer staples and bank stocks helped to pull the bourse back from earlier gains after the market opened slightly stronger in defiance of a weaker Wall Street at the weekend.

Investors booked profits on Wesfarmers and Woolworths before their second-quarter retail sales results this week.

At the close, the benchmark S&P/ASX 200 Index was down 15.7 points, or 0.4 per cent, at 4272.7, while the All Ordinaries Index fell 14.1 points, or 0.3 per cent, to 4334.4. The March share price index futures contract fell five points to 4245.

Among yesterday's worst performers was the consumer staples sector, which lost 0.7 per cent, as investors remained wary of possible earnings downgrades this week.

City Index analyst Peter Esho said he expected Woolworths's second-quarter sales to be below market expectations. "The expectation is for a 2 to 6 per cent rise but I think that's a bit high," he said. "I think there's the possibility the earnings guidance could be reduced."

Woolworths shares ended at a two-month low at $24.45, down 32?.

Wesfarmers shed 16? to $30.17 ahead of its second-quarter sales data from its Coles supermarket division on Thursday.

Bell Direct analyst Julia Lee said she expected retailers would underperform in the general market because of competition from offshore websites that have benefited from the stronger Australian dollar.

"This week is about consumer staples and next week will be about the financials," she said.

The financial sector lost 0.5 per cent, the big banks closing mostly lower. The federal Treasurer, Wayne Swan, yesterday said he would continue to put pressure on lenders to cut their interest rates in line with any reduction in the Reserve Bank cash rate, despite concerns about rising funding costs among the banks.

National Australia Bank fell 17? to $23.91, ANZ was down 3? at $21.47, Commonwealth Bank was down 12? at $51.04 and Westpac was 19? weaker at $21.10.

BHP Billiton was up 1? at $37.67 and Rio Tinto slipped 78? to $69.

Leighton Holdings was down 28? at $23.45 despite its Thiess subsidiary winning a $260 million contract to develop a port in the north of Western Australia. Transurban shares lost 7? to $5.50 after the toll road operator's chief executive, Chris Lynch, announced he was resigning.

Ten Network shares were up 0.5? at 89.5? after reports that Seven Group chairman Kerry Stokes had sold his 2 per cent stake in the broadcaster.

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