Market edges up but brokers feel pain

It was the market's fifth-consecutive weekly rise: the longest run of weekly rises in two years.

Have things started to improve for investors? Some fund managers think so, but stockbrokers do not.

As the profit season rolled on this week, the Australian Securities Exchange released some disquieting figures. Since the start of the new financial year, the ASX says the level of activity in equity and derivatives markets has been well below the same time last year.

In the six weeks to August 10, the daily average cash market value traded was $3.5 billion: 24.6 per cent below the full-year 2012 average.

According to ASX chief Elmer Funke Kupper, cash market volumes have been down, and volumes in the interest rate futures market have fallen away. Part of the problem is markets have become less volatile.

Despite signs that things are getting better the value of turnover was $4.3 billion yesterday it is still not a good time to be a stockbroker. The state of mind of Australia's stockbrokers could be summed up by a tweet from website zerohedge this week: "What hits zero first: VIX or Volume?" It was a sign of desperation.

The VIX is the Volatility Index, a measure of the implied volatility of the US sharemarket. If it starts to decline that means fewer people fear the market is going to implode. But as fear recedes, fewer trades are being made because investors are happy enough to hold positions or to stay out of the market. That's not good for the industry.

BBY chief executive Glenn Rosewall said this week that the industry could not bet on volumes improving greatly. "Equities are unfashionable at the moment . . . obviously the shift in focus has been towards cash or fixed-interest products," he said.

"You could have quite an extensive period where they remain unfashionable . . . we've had four years where we've been struggling, and we could have another four or five years of difficult times."

For stocks this week, AMP rose 13? to $4.11 after it beat expectations with a 7 per cent rise in underlying first-half profit.

ASX fell 66? to $30.77 after reporting a 4 per cent drop in annual net profit, blaming decreased investor activity arising from Europe's debt crisis.

BlueScope Steel rose 14?, up 53.8 per cent, to 40? after it struck a deal with Japan's largest steel maker that will help it capture overseas markets and wipe out debt.

Commonwealth Bank climbed $1.41 to $57.35 after it reported a record $7.1 billion profit.

Echo Entertainment fell 11? to $4.05 after the casinos operator said any potential proposal from rival Crown, or Malaysian gambling group Genting, must recognise the value of its "good, long-term licences" in New South Wales and Queensland.

Wesfarmers rose $2.40 to $34.67 after posting an 11 per cent lift in full-year profit.