Australian share market opens flat

THE Australian sharemarket has opened flat, shrugging off recent falls on global share markets on the back of China’s surprise devaluation of its currency.

Trader Anthony Riccio works on the floor of the New York Stock Exchange Tuesday, Aug. 11, 2015. U.S. stocks opened lower on Tuesday, led by declines in energy and materials stocks as commodities prices dropped. Prices for oil and copper fell sharply after China's government lowered the value of its currency, suggesting weakness in the world's second-largest economy. (AP Photo/Richard Drew)

THE Australian sharemarket has opened flat, shrugging off recent falls on global share markets on the back of China’s surprise devaluation of its currency.

In an attempt to give its exports a boost, the People’s Bank of China (PBoC) on Tuesday devalued the yuan by 1.85 per cent, the biggest drop since China unpegged the yuan from the US dollar in 2005.

CMC Markets chief market strategist Michael McCarthy expects to see a turnaround in market sentiment over the PBoC’s move following falls of around one per cent on overseas markets.

“The move yesterday sparked a negative reaction but, generally, markets see economic stimulus as good news,” he said.

“It’s the commodity markets that are giving the clue once again because oil has gained strongly in early Asian trading.” The Commonwealth Bank, on Wednesday announced a $5 billion capital raising as it unveiled a five per cent rise in cash profit to $9.14 billion, which was largely in line with expectations. CBA shares have been placed in a trading halt while it carries out the institutional component of its capital raising but the other big banks were all up around one per cent, leading the market higher.

At 1037 AEST, Westpac was up 44.5 cents to $32.495, NAB had gained 22 cents to $32.68 and the ANZ had risen 22 cents to $30.29. Primary Health Care shares rose 12 cents, or 2.7 per cent to $4.57 after the medical centres and pathology provider said full year net profit was up 19 per cent, slightly above guidance. While Vaccine giant CSL was down $1.35, or 1.4 per cent, at $93.76 after saying its full year net profit was up 5.5 per cent. Mr McCarthy said market reaction to the CSL result was surprising and he suspects its shares will bounce back if the broader market improved.

AGL Energy’s share were up 13 cents to $16.73, after it reported a 62 per cent fall in its full year net profit due to writedowns to its gas operations and the cost of acquiring NSW power provider Macquarie Generation.

In the resources sector, BHP Billiton was down two per cent to $25.795, while Rio Tinto was down 3.6 per cent to $52.66, and Fortescue Metals lost 5.4 per cent to $1.84.

KEY FACTS

* At 1037 AEST, the benchmark S&P/ASX200 index was down 1.9 points, or 0.03 per cent, to 5,471.3 points.

* The broader All Ordinaries index was down 2.6 points, or 0.05 per cent, to 5,470.5 points.

* The September share price index futures contract was up nine points at 5,415, with 12,668 contracts traded.

* National turnover was 501 million securities worth $954.4 million.