Stocks having a particularly good day included Leighton Holdings (ASX: LEI) up 4.3%, recouping some ground after the turmoil of last week when three members of the board resigned. Macquarie Group (ASX: MQG) also had a good day, up 2.2%, helped along by news that it may offload its shareholding in OzForex for a substantial profit

The financial sector had a good day, with the stand outs being the second-tier banks  which outperformed the market. Bank of Queensland (ASX: BOQ) and Bendigo and Adelaide Bank (ASX: BEN) both rose over 2%. Given the Big 4 banks, for the most part have outperformed the second-tier banks over the last year, it appears investors are trying to squeeze a little more upside out of these relatively less-expensive smaller bank stocks.

Earnings growth needed

For investors paying above average market multiples for stocks, they need to be confident that earnings growth is going to eventuate. If it doesn't, then expect multiples to likely contract. While history may not always repeat, investors with a good understanding of the past are better equipped for the future.

Foolish takeaway

As the market continues to trend upwards it would be Foolish to not consider the multiple expansions that have occurred. Many stocks are looking fully priced and therefore may not provide particularly attractive returns if purchased at this point. There are however still opportunities for enterprising investors.

In the market for high yielding ASX shares? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, 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.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

The post Market off to a flying start appeared first on The Motley Fool Australia.

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For the record, the Dow Jones Industrial Average fell 2.2%, the S&P 500 Index dropped 2.5% and the Nasdaq Composite gave up 2.8% on Friday trading in the United States (Friday night our time).

Roll out the headlines: 'the worst percentage fall since…', 'the biggest points fall since…' and a personal favourite '$x billion lost in market rout' – or similar.

Nothing sells like doom and gloom does it? Actually, one thing sells better – reports of losses in the billions of dollars.

Newspapers and television news need to get readers and viewers – and as consumers, we can't help ourselves. We are drawn towards stories of loss and horror. They are giving us what we want. Good news doesn't sell, I'm afraid.

We're likely to see falls on our market, with the ASX SPI down 58 points to 4012 points, representing a loss of 1.4% – and expectations are that the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) and the All Ordinaries (Index: ^AORD) (ASX: XAO) will suffer steep falls at the open.

Attention is now turning to what the Reserve Bank of Australia will do with interest rates, with opinion seemingly split between a 25 basis point cut and a 50 basis point cut at the next meeting.

That represents good news for our banks, including ANZ (ASX: ANZ), Commonwealth Bank (ASX: CBA), National Australia Bank (ASX: NAB) and Westpac (ASX: WBC), who will likely keep some of any cut for themselves (and the smaller banks such as Bank of Queensland (ASX: BOQ) and Bendigo & Adelaide Bank (ASX: BEN) who can equally use some margin padding.

The other cheerleaders hoping for a larger cut will be our retailers – particularly those in 'discretionary' retail who have been hardest hit by the consumer spending downturn. David Jones (ASX: DJS) and Myer (ASX: MYR) will likely be at the head of that queue, with major retailers Woolworths (ASX: WOW) and Wesfarmers (ASX: WES) close behind, hoping that wallets will open in their Big W (in Woolworths' case) and Kmart and Target (Wesfarmers) cases. Even the likes of OrotonGroup (ASX: ORL) and Noni-B (ASX: NBL), which have weathered the recent storms better than most, will be hoping for a large cut.

With all of the fear in the market today, there will be many investors heading for the exits and shares are likely to open lower. That presents opportunities for patient investors to take advantage of the panic and scoop up some bargains. With the All Ordinaries trading at a price/earnings ratio unseen in a decade (outside of the six months to February 2009), bargain hunters will be busy today.

If you're in the market for some high yielding ASX shares to give your portfolio some stability, look no further than our Secure Your Future with 3 Rock-Solid Dividend Stocks report. In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

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Scott Phillips is an investment analyst with The Motley Fool. He owns shares in David Jones, Woolworths and OrotonGroup. You can follow Scott on Twitter @TMFGilla. Take Stock is The Motley Fool Australia'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).

The post The US sneezes and the ASX catches a cold appeared first on The Motley Fool Australia.

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Apparent consumption of alcohol decreased by 1.1% in 2010-11 to 182.0 million litres, according to figures released today by the Australian Bureau of Statistics (ABS).

This was the first decrease recorded since 2001-02, and was due to decreases in the volume of pure alcohol from beer (down 3.4%) and wine (down 0.6%).

Whilst it may be good news for the health of Australians, it may not be such good news for the likes of booze retailers Woolworths (ASX: WOW) and Wesfarmers (ASX: WES) and wine-maker Treasury Wines Estate (ASX: TWE), although it must be noted the effects on the profits of those companies will be minimal.

Does the "booze barometer" confirm The Reserve Bank of Australia's decision to slash interest rates by a half of one percent was correct?

Booze is a classic discretionary-spend item. But because of its addictive qualities, it's also one of the last things a struggling household will cut from its budget.

Many people are doing it tough out there in suburbia, saddled with massive mortgages, and faced with higher energy costs, amongst other things. For some, cutting back on booze would have been the final straw.

The RBA's belated but decisive interest rate cut was absolutely necessary, and Bank of Queensland (ASX: BOQ), Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank (ASX: NAB) have already moved to cut mortgage rates. Westpac (ASX: WBC) and ANZ (ASX: ANZ) will follow shortly.

The effects of the interest rate cuts won't flow through to the economy for a number of months, but it's definitely a move in the right direction.

In the Australian Financial Review, former federal opposition leader John Hewson says the RBA should continue slashing interest rates so they are in line with other developed economies, saying it would be better if the cash rate was as low as 2%.

It's not going to happen, certainly under Glenn Steven's watch. A better result would be for interest rates in the rest of the deveoped world to move up towards ours — a meeting in the middle, if you like.

But…I wouldn't hold your breath.

Cheers!

If you're looking in the market for some high yielding ASX shares, look no further than "Secure Your Future with 3 Rock-Solid Dividend Stocks". In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

For more Foolish reading, check out these stories we published yesterday:

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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. Bruce Jackson has an interest in all the companies mentioned in this article except Bank of Queensland. This article contains general investment advice only (under AFSL 400691).

The post 'Booze barometer' confirms RBA's decision to cut rates appeared first on The Motley Fool Australia.

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After a strong lead from Wall Street and an optimistic increase in the ASX SPI futures this morning, the ASX looked set for good gains today.

In what seems to be an ongoing trend, the market itself was more pessimistic than either of those data points would suggest.

The S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) closed up only 0.1% to 4,435.9 points while the All Ordinaries (Index: ^AORD) (ASX: XAO) managed to do slightly better, up 0.2% to 4,5014.8.

That result compares reasonably poorly to the lead from US markets, where the Dow Jones Industrial Average closed up 0.5%, and the S&P 500 finished with a 0.6% gain.

More rates news

The banks were – unsurprisingly – in the news today, in the wake of yesterday's cut in the official cash rate by the Reserve Bank of Australia. Government politicians were today calling for the banks to reflect the full 50 basis point cut that the RBA had decided to implement, but the only two major banks who had announced changes by the end of trading today declined to acquiesce to those demands.

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Instead, National Australia Bank (ASX: NAB) reduced rates by 32 basis points (0.32 percentage points) today, while Bank of Queensland (ASX: BOQ) announced yesterday that it would pass on a 35 basis point cut to its mortgage holders.

Banks – and the less partial commentators – are arguing that the smaller reductions are in recognition of the reality that the banks don't just source their funding from Australian depositors, but also from international markets, which haven't seen a similar reduction. Treasurer Wayne Swan this morning told Sky Business he didn't really care about declining bank margins – but then he has an unsympathetic electorate to mollify.

Bank profit growth will be difficult

Fellow bank ANZ (ASX: ANZ) was in the news this morning, releasing earnings figures of its own. ANZ topped NAB's recent earnings, with a 10% profit increase (6% on an underlying basis) to be the best-performed of the big four banks on the most recent round of profit announcements. ANZ CEO Mike Smith confirmed what we've been saying for a while now – we are in a new world of 'persistently lower credit growth' which is not good news for banks – or their shareholders

While ANZ has its own new timetable of interest rate changes that it will follow, the market (and mortgage holders) are eagerly awaiting announcements from the Commonwealth Bank (ASX: CBA) and Westpac (ASX: WBC).

Late to the party… but at least they made it

Investors have continued to cheer the news that Woodside (ASX: WPL) has finally commenced production at its Pluto field off Western Australia. The company endured cost blowouts and delays, but has finally brought the field on-stream. Woodside shares were up 1.3% today.

Meanwhile, Singapore Telecom (ASX: SGT) –owned Optus today announced it was shedding 750 jobs as part of a broad restructure, the media sector continues to reorganise with APN News & Media (ASX: APN) looking to do deals in New Zealand, and Telstra (ASX: TLS) has outlined its plans to grow by selling new products on the coming NBN network.

Winners and losers

With shares up 0.1% today, there were some key winners and losers among the sub-indices. Leading the charge were the Health Care sector, up 0.9%, Energy, which put on 0.7% and Materials and Property, which both added 0.6%. The laggers included the Utilities sector, down 1.9%, Financials-ex-Property, down 0.4% and Financials, which lost 0.3%.

Among the individual ASX 200 component companies, five managed a gain of over 3.5%, including Sandfire Resources (ASX: SFR) and Beadell Resources (ASX: BDR), which put on 4.3%, Stockland (ASX: SGP), which gained 4.2%, Regis Resources (ASX: RRL), which added 4%, and Dart Energy (ASX: DTE), which gained 3.6% on the day.

Five ASX 200 companies lost more than 4% today, the worst being APA Group (ASX: APA), down 6.4%, Wotif.com (ASX: WTF) – which we covered yesterday – and Energy World Corporation (ASX: EWC) which both lost 4.3%, Mirabela Nickel (ASX: MBN), off 4.2% and the struggling JB Hi-Fi (ASX: JBH) which continued its sorry run, closing 4.1% lower, having lost almost 25% over the past three months.

One important outcome from yesterday's rates decision is that bank deposits continue to be less and less attractive for investors seeking income. We think that's where shares can play an important, but often overlooked role. To find out why, and see which shares we think fit the bill, look no further than "Secure Your Future with 3 Rock-Solid Dividend Stocks". In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

Scott Phillips is an investment analyst with The Motley Fool. Scott owns shares in Telstra – and has a mortgage. You can follow him on Twitter @TMFGilla. Take Stock is The Motley Fool Australia'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).

The post ASX Market Wrap: ASX up – just – and again underperforms the Dow appeared first on The Motley Fool Australia.

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Despite two nights of positive news out of the US and a strong early start, the Australian market couldn't hold onto the best of the day's gains, but still closed in positive territory.

The S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) closed at 4,375.2 and the All Ordinaries (Index: ^AORD) (ASX: XAO) at 4,445.0, both up 0.3%. The ASX 200 was up around three-quarters of one percent after the first ten minutes of trading, but that was to be the high point of the day, with the index giving ground steadily and largely unchecked throughout the day.

The Dow Jones Index had closed overnight up 0.7% after a gain of 0.6% the previous night, while the S&P 500 gained 1.4% and 0.4% respectively and while the Nasdaq was off 0.3% on Tuesday night, it well and truly recovered that loss with a gain of over 2% last night.

Jobs were in the spotlight today, with reports Ford (NYSE: F) plans to stand down 1,800 workers in Victoria and the St. George division of Westpac (ASX: WBC) looks to outsource 200 jobs, some potentially to India and elsewhere.

The big mover on the market today was television and newspaper proprietor Seven West Media (ASX: SWM). The company had released an earnings downgrade almost an hour and a half after the market closed on Tuesday, before the ANZAC Day closure. If Seven West had hoped to avoid too much coverage of its downgrade, investors certainly nixed that, with almost a quarter of the company's market value disappearing in the six hours of trade today after shares dropped 22.8%.

Much of the media sector felt the chill of the ill wind, with APN News & Media (ASX: APN) down 2.4%, Fairfax Media (ASX: FXJ) off 2.8%, Southern Cross Media (ASX: SXL) down 4%, and Ten Network (ASX: TEN) down 0.6%.

News Corporation (ASX: NWS) managed to buck the trend, closing up 0.1%, probably due to its now proportionally small exposure to traditional media in Australia, and possibly as investors were relieved that Rupert Murdoch's evidence at the UK's Leveson Media Inquiry didn't unearth any further damaging revelations.

Meanwhile, TPG Telecom (ASX: TPM) was today fined $13,200 for misleading advertising, putting Telstra (ASX: TLS), Optus, a subsidiary of Singapore Telecommunications (ASX: SGT) and iPrimus – now owned by M2 Telecommunications (ASX: MTU) on notice for including too many "fine print qualifications" in their advertising material.

The Telecomms sector led the gains on the ASX today, up 1.1%, followed by Health Care, up 0.9% and and Utilties, which rose 0.7% in today's trading. Laggers were led by Consumer Discretionary stocks, down 0.9%, and the A-REIT sector which was off just 0.1%.

The ASX 200 was led by a trio of resources related companies, with OneSteel (ASX: OST) up 4.3%, Sandfire Resources (ASX: SFR) which put on 4.2% and Paladin Energy (ASX: PDN) which rose 4.1%. Other notable gainers included the Bank of Queensland (ASX: BOQ), up 3.6%, Imdex (ASX: IMD) up 3.5% and Boart Longyear (ASX: BLY) which gained 3.5%.

The largest losses on the ASX 200 were recorded by the aforementioned Seven West Media. Daylight was second, followed by Southern Cross Media. From the bottom 15 performers on the ASX today, it was perhaps no surprise that four were media companies.

Of the non-media stocks, the largest losses were Newcrest Mining (ASX: NCM), down 3.9%, AWE Limited (ASX: AWE), which fell 3.3%, Whitehaven Coal (ASX: WHC) which lost 3.3% and Troy Resources (ASX: TRY) which closed down 3.2%.

With consumer spending so soft, it's a brave investor who has significant exposure to media and retailing at the moment – but on the other hand as Baron Rothschild was quoted as saying, perhaps the best time to buy is when there's blood in the streets.

In either circumstance, the long term is what matters, not the daily gyrations of the market.

The ASX is already on the move in 2012, and Goldman Sachs experts recently said they reckon S&P/ASX 200 could top 5,000 next year. Read This Before The Coming Market Rally is a must-read for investors who don't want to miss out on the party. Click here now to request your free copy, before it's too late.

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Scott Phillips is an investment analyst with The Motley Fool. Scott owns shares in Telstra. You can follow him on Twitter @TMFGilla. Take Stock is The Motley Fool Australia'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).

The post ASX Market Wrap: Gives up early gains, but closes in the green appeared first on The Motley Fool Australia.

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