MARKET CLOSE -- Commonwealth Securities
(4.30pm AEST)

The Australian sharemarket was lower in the first half of the day; however our fortunes changed for the better following solid economic numbers out of China today. The ASX 200 index (XJO) rose 0.40 pct or 19.4 pts to 4514.8 while the broader All Ordinaries index (XAO) gained 0.40 pct or 19.7 pts to 4583.2.

Unfortunately, even when taking into account today's gains Australian shares have fallen by 2.5 pct this week. Global markets have experienced downward pressure following the additional focus on European debt.

The S&P/ASX 200 Materials index rose 0.8 pct or 83.4 pts to 13457.1 today. The world's largest miner, BHP Billiton (BHP) rose 0.39 pct or 17 cents to $43.63 while the smaller RIO Tinto (RIO) fell 0.59 pct or 48 cents to $80.95. The world's fourth biggest gold producer, Newcrest Mining (NCM) rose 0.65 pct or 25 cents to $38.96. The price of gold hit an all-time high of US$1568.25.

The price of the precious metal has been consistently gaining almost each and every year since 2000. The price of gold has risen 9.9 pct so far in calendar year 2011, 41 pct since the start of 2010, 77 pct since January 2009 and over 440 pct since the year 2000. Keep in mind this does not take into account currency movement. Back in January 2000, the Australian dollar was buying around US65 cents.

The S&P/ASX 200 Financials index gained 0.09 pct or 3.6 pts to 4123.5. Three of the big four banks ended mixed, with ANZ Banking Group (ANZ) rising 0.38 pct or 8 cents to $21.16, Commonwealth Bank of Australia (CBA) falling 0.08 pct or 4 cents to $49.60 and Westpac (WBC) closed flat. National Australia Bank (NAB) was once again the worst performer after falling 0.5 pct or 12 cents to $23.76.

The S&P/ASX 200 Energy index improved by 0.8 pct or 117.1 pts to 14746.1. Australia's second largest oil and gas producer, Woodside Petroleum (WPL) rose 0.38 pct or 8 cents to $21.16 and Santos (STO) gained 0.08 pct or 1 cent to $13.14.

Most of Australia's largest retailers, including David Jones (DJS), Harvey Norman (HVN) and JB Hi-Fi (JBH) all traded in the red today. DJS fell 1.76 pct or 7 cents to $3.91 while its competitor Myer (MYR) rose 1.15 pct or 3 cents to $2.65.

On the rural front, U.S grain markets rose strongly overnight with the price of wheat jumping by 9 pct. Agrichemical Company, Nufarm (NUF) has said that its net profit will most likely fall between $88 and $94 million for the full year. NUF, which manufactures herbicides and pesticides closed 1.79 pct or 8 cents higher to $4.56.

Media giant, Newscorp (NWS) continues to be heavily traded and is down sharply once again, taking its falls for the week to 11.5 pct. Today, its shares fell 2.96 pct or 45 cents to $14.74.

The U.K government overnight said it would support a motion aimed at making NWS's proposed takeover of BSkyB more difficult.

The coal producers are up slightly today, following impressive gains posted yesterday. On Tuesday, Australian coal miner MacArthur Coal (MCC) received a $5 billion takeover offer from 2 large foreign miners. This resulted in its shares jumping by 36 pct on Tuesday. By close of business today, MCC shares rose 0.53 pct or 8 cents to $15.22.

The airlines rose strongly today, with Virgin Blue (VBA) rising 1.61 pct or 0.5 cent to 31.5 cents while the larger Qantas (QAN) gained 1.09 pct or 2 cents to $1.86. In slightly odd news, right-handed aircraft engineers for QAN have said they will only work with their left hands on Friday in protest against Australia's biggest and oldest airline.

One of the big three global ratings agencies, Standard & Poor's said its current ratings on Australian companies will not be immediately affected due to the carbon tax.

On the economic front in Australia today, the latest consumer confidence report was released and recorded a huge 8.3 pct fall this month. This indicates that the average Australian is not feeling confident when it comes to the economy or their finances and gives the Reserve Bank of Australia (RBA) yet another reason to remain on the interest rate sidelines next month.

Commsec economist Savanth Sebastian said that "another survey has confirmed that consumers are down in the dumps. Both the Roy Morgan Consumer Confidence Rating (which was released last week) and the Westpac/Melbourne Institute survey have both registered consumer confidence levels at a 26-month low."

Interestingly, both surveys are conducted in a slightly different manner. Mr Sebastian explained by saying that "Both surveys of consumer spirits date back to 1973 and both ask similar questions. Roy Morgan conduct face-toface interviews with over 1,100 people each month while the Melbourne Institute conducts telephone interviews with 1,200 people each month. The Reserve Bank is understood to average the two surveys to get an accurate impression on how people are feeling."

On a slightly positive note, the Australian Bureau of Statistics (ABS) released its latest lending finance numbers which recorded a bounce back off five year lows. Total lending across the country improved by 6.1 pct in May after falling in April.

Mr Sebastian commented by saying that "The improvement in the latest lending data hardly suggests that activity levels are rebounding. Rather it is more a reflection of a bounce of very low levels. In fact lending was holding near five year lows prior to the latest release and as such a sustained improvement would be required to claim a revival."

Despite the Australian sharemarket trading lower for the first half of the session, some solid economic figures out of China helped lift shares for the first time this week. The world's second largest economy generally releases almost all of its data over one to two days each month. This tends to be around the middle of each month.

Today's data included China's latest growth reading for the previous quarter. The National Bureau of Statistics also held its monthly press conference to deliver a prepared presentation in addition to taking some media questions. China's retail spending has improved by 17.7 pct over the past 12 months which was more than expected.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is up 0.49 pct or 22 pts to 4488.

Most major European markets trade between 5pm (AEST) and 1.30am (AEST). Futures in Europe are currently mixed.

Dow Jones futures are higher, indicating that U.S shares will start in positive territory when American markets open at 11.30pm (AEST).

AUD moves up
The Australian dollar has improved and currently buys US106.3 cents, JPY84.46 and EUR75.89. Amazingly, the Aussie has jumped by 18 cents against the USD over the past 12 months

One of the best performing shares today was Eastern Iron (EFE), which rose 30 pct or 3 cents to 13 cents. EFE is a minerals explorer based in NSW. It was first listed on the ASX in 2008 and has a market capitalisation of $8.48 million

Steven Daghlian
Commsec Market Analyst