Market to rise as profit season nears end

AUSTRALIAN shares are tipped to open higher this morning, in the last week of profit reporting season, after US and European stocks rallied on Friday.

By InvestSMART · 27 Aug 2012

By InvestSMART ·
27 Aug 2012

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AUSTRALIAN shares are tipped to open higher this morning, in the last week of profit reporting season, after US and European stocks rallied on Friday.

Futures trading indicated the benchmark ASX200 index would open 25 points higher at 4357 points, following a 0.7 per cent gain on Wall Street on Friday. European markets were also mostly higher.

However, analysts said a positive opening this morning would not be a certainty because the dual-listed global miners BHP Billiton and Rio Tinto had lost about 1.5 per cent in value in London trade late on Friday.

The falls came after BHP last week decided to shelve the massive Olympic Dam mine expansion in South Australia, a decision that had some market commentators declaring the end of the mining boom.

Investors' focus will be on the final week of the profit reporting season. Caltex, Toll Holdings and Billabong report today.

So far, earnings season has been surprisingly positive, with 33 per cent of the profit results better than the market had expected, and 16 per cent worse than expected.

Economic news this week includes the release of June quarter construction activity figures on Wednesday, and capital expenditure on Thursday. The latter will provide an insight into whether mining activity has slowed.

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Frequently Asked Questions about this Article…

Will Australian shares open higher today and what does futures trading say about the ASX200?

Futures trading signalled a higher open, indicating the ASX200 could start about 25 points higher at 4,357 points, helped by a 0.7% gain on Wall Street and mostly higher European markets. However, a positive open wasn’t guaranteed because some large dual‑listed miners had slumped in London trade.

Why did BHP Billiton and Rio Tinto fall in London trade and how big were the moves?

BHP Billiton and Rio Tinto fell about 1.5% in London trade. The falls followed BHP’s decision to shelve the massive Olympic Dam mine expansion in South Australia, a development that prompted some market commentators to suggest the mining boom might be over.

What was the significance of BHP shelving the Olympic Dam expansion?

BHP’s decision to put the Olympic Dam expansion on hold was significant enough to trigger share price falls for major miners and to prompt commentary about the possible end of the mining boom. The article notes the move has become a focal point for market discussion about future mining activity.

Which companies are reporting in the final week of profit reporting season?

The article highlights that investors’ attention was on the final week of profit reporting, with Caltex, Toll Holdings and Billabong scheduled to report on that day.

How has the earnings season performed so far for companies reporting profits?

Earnings season had been surprisingly positive overall: 33% of profit results came in better than the market expected, while 16% were worse than expected.

What economic data should investors watch this week for signals about mining activity?

Investors were advised to watch June quarter construction activity figures released on Wednesday and the capital expenditure report on Thursday. The capital expenditure data in particular should provide insight into whether mining activity has slowed.

How are international markets influencing the Australian share market outlook?

A 0.7% gain on Wall Street and mostly higher European markets supported expectations of a higher ASX open. At the same time, weakness in globally dual‑listed miners in London tempered certainty about a positive local open.

As an everyday investor, what should I monitor during the last week of profit reporting season?

Based on the article, everyday investors should monitor the final profit reports (notably from companies like Caltex, Toll Holdings and Billabong), watch futures and international market moves for early signals on the ASX, and keep an eye on key economic releases—especially capital expenditure and construction activity—for clues about mining sector momentum.