Shares edge up as investors stick to sidelines

Close Australian shares struggled to hang on to their early gains, closing slightly higher as a small recovery rally fizzled in the afternoon, with investors sticking to the sidelines ahead of major earnings reports.

The benchmark S&P/ASX200 index climbed 7.3 points, or 0.2 per cent, to 4521.4, after earlier rising as high as 4551 points. The broader All Ordinaries index gained 6.3 points, or 0.1 per cent, to 4538.8.

On a sector-by-sector basis, materials rose 0.4 per cent, financials gained 0.4 per cent and energy shares were up 0.3 per cent. Industrials dropped 0.5 per cent and telcos fell 0.8 per cent.

"Despite indications that the unemployment rate in the US might have peaked, the market was a little gun shy today," said CMC Markets analyst David Taylor. "The Dow Jones Index, despite finishing in the black, actually had a bit of a rough night on Friday and that unsettled traders.

"Turnover was thin today as the market prepares to digest more earnings reports, and as we dust ourselves off after what has been a fairly rocky couple of weeks."

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Bell Potter Securities senior client adviser Stuart Smith said the market was awaiting earnings results of BHP Billiton and Commonwealth Bank on Wednesday, followed by Rio Tinto on Thursday.

‘‘We’ve had no guidance to the negative for the upcoming (earnings) season, so Wednesday will tell the tale,’’ he said.

Westpac outshines   

Westpac outshone the other major banks, jumping 64 cents, or 2.8 per cent, to $23.25 following an announcement by Treasurer Wayne Swan on Sunday that the federal government would wind back its wholesale funding guarantee for local lenders.

‘‘Westpac got in early and raised their funds,’’ Mr Smith said.

Commonwealth Bank firmed 10 cents, or 0.2 per cent, to $52.77, National Australia Bank gained 16 cents, or 0.6 per cent, to $25.47 and ANZ added 7 cents, or 0.3 per cent, to $20.97.

Wealth manager and insurer AMP put on 10 cents to $6.25 after confirming its exclusivity agreement with AXA SA had lapsed, leaving rival predator NAB to seek AXA SA’s agreement to acquire AXA Asia Pacific Holdings (AXA APH).

AXA APH’s stock closed steady at $6.45.

Among the major miners, BHP Billiton rose 5 cents to $39.60 and Rio Tinto gained 58 cents to $67.18.

JB Hi-Fi chief to exit

In companies news today, retailer JB Hi-Fi announced first-half results, reporting a 29 per cent increase in net profit for the first half of 2009-10 and announced chief executive Richard Uechtritz would step down later this year.

JB Hi-Fi shares dropped $1.03 or 5.1 per cent, to $19.07.

Ord Minnett research analyst Richard Ivers said JB Hi-Fi shares were sold off after the announcement that chief executive Richard Uechtritz would leave the company. He added the company did not wow the market by beating expectations significantly as it had in the past.

Rival Harvey Norman gained 7 cents to $3.69, while Woolworths dropped 15 cents to $25.52 and Wesfarmers added 13 cents to $27.31.

Woodside Petroleum jumped 81 cents, or 2 per cent, to $42.33, outpacing Oil Search, which firmed 2 cents, or 0.4 per cent, to $5.18. Santos fell 5 cents to $13.15.

Dual-listed gold producer Newmont Mining surged 29 cents, or 5.8 per cent, to $5.26 as investors prepared for the company’s delisting from the Australian Securities Exchange.

‘‘There have been sellers who don’t want an overseas stock and there have been buyers who say ‘we might as well mop up this stock’ on the basis that they think gold is okay,’’ Mr Smith said.

Lihir Gold advanced 5 cents to $2.79 and Newcrest Mining gained 37 cents to $31.52.

Ten surges

Major media stocks lost ground except for free-to-air television networks, which rose after the government said it would reduce licence fees in a bid to lift investment in locally produced content and help fund the switch to digital.

Seven Network finished up 16 cents, or 2.4 per cent, to $6.88 and Ten Network Holdings surged 14.5 cents, or 9.6 per cent, to $1.66.

Fairfax Media lost 2.5 cents, or 1.5 per cent, to $1.70, News Corp fell 45 cents, or 2.5 per cent, to $17.35 and its non-voting scrip dropped 28 cents, or 1.8 per cent, to $14.94.

In other news, explosives and fertiliser supplier Incitec Pivot said it would restart construction of its $935 million ammonium nitrate plant in central Queensland in May after an almost year-long delay. Incitec Pivot stock gained 3 cents to $3.29.

AWB eased 1 cent to $1.00 ahead of a class action proceeding in the Federal Court on Wednesday involving over 1000 investors seeking damages for the company’s failure to disclose Iraqi kickbacks.

Verus Investments was the top traded stock by turnover, with 274.25 million shares traded for $18.96 million. Verus stock firmed two cents, or 38.5 per cent, to 7.2 cents.

Preliminary national turnover reached 2.58 billion shares, worth $4.23 billion, with 513 stocks up, 559 down, and 340 steady.

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AAP, with BusinessDay