China to the rescue

The S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) has ended flat, down just 4.3 points to 4,308.3, as China’s inflation rate fell below 2% for the first time in two and a half years triggering fears of a slowdown in Australia’s biggest export market.

The Australian dollar has risen against the greenback, trading just under 106 US cents, bouyed by the unemployment rate that remained steady at 5.2%. Economists had expected a slight rise to 5.3%.

Company news

Telstra Corporation (ASX: TLS) has reported its first growth in four years, with earnings up 5.4% to $3.4 billion, as the company added 1.6 million new mobile customers during the year. Despite the good news, the share price fell 2.3% to $3.88.

Rupert Murdoch’s News Corporation Limited (ASX: NWS) announced an underlying operating income of US$5.6 billion, but has taken a US$2.8 billion writedown on its publishing business, most of it attributed to its Australian operations. Investors didn’t appear to like the news much, punishing the share price which dropped 3.2% to $21.88.

Gaming and entertainment group Tabcorp Limited (ASX: TAH) has reported a 3% increase in revenues to $3.0 billion, while underlying profit rose 12.7% to $340m over 2011. The big issue for Tabcorp and its shareholders though, is the termination of its Victorian poker machine licence next week and the likely negative impact on its earnings.

Webjet Limited (ASX: WEB) shares have closed up 4% to $3.65, as the company reported a 24% increase in net profit over the previous year, despite a generally flat travel market.

Winners and losers

Of the majors, Iluka Resources Limited (ASX: ILU), Computershare Limited (ASX: CPU) and Rio Tinto Limited (ASX: RIO) all posted higher than 3% rises, with Iluka up 5.9%.

News Corp, property company Goodman Group (ASX: GMG) and Qantas Airways Limited (ASX: QAN) were the biggest losers on the day, all falling more than 3%.

The Foolish bottom line

It appears that hopes of stimulus moves by US and European Central Banks are fading. On the other hand, China’s official inflation target is 4%, and with Chinese inflation falling below 2%, reports in Fairfax media have speculated that the low rate could allow China to stimulate growth in its economy. That could be good news for our resources companies.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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