Australian Stock Market Report – Afternoon 10/11/2011

AFTERNOON REPORT (4.30pm AEDT)

The local share market made it five wins in a row today, notching up the longest string of advances since early April. Hopes European leaders are closer to a long-lasting solution to the sovereign debt crisis gave investors a positive offshore lead, while sentiment was also boosted by a pick-up in business conditions and confidence, and ahead of the US reporting season which kicks off tonight. The All Ordinaries Index (XAO) rose 26.5pts or 0.6pct to 4288.8 while the S&P/ASX 200 Index (XJO) added 26.6pts or 0.6pct to 4227.6.

Material stocks were generally in favour, with the S&P/ASX 200 Materials Index rising 0.8pct. Index leader BHP Billiton (BHP) firmed by 0.8pct to $37.39 while Rio Tinto (RIO) gained 0.9pct to $68.

Shares in steel makers received a boost after the Greens revealed they would back a $300 million support package for the industry. Bluescope Steel (BSL) added 5.9pct to $0.895 while Onesteel (OST) gained 3pct to $1.38.

Sundance Resources (SDL) shares fell 1.2pct to $0.43. The company today rejected suggestions regulatory approval for a takeover bid by China´s Hanlong Mining is being held up by an insider trading probe faced by former Hanlong executives.

Meanwhile, in the energy space, shares in Paladin Energy (PDN) and Extract Resources (EXT) came off yesterday's highs. Extract has made a submission to the corporate watchdog, the Securities and Investment Commission, about terms and conditions for a possible takeover offer from a Chinese firm. London listed uranium miner Kalahari Minerals owns nearly 43pct of EXT and overnight confirmed it's in takeover talks with China's Guangdong Nuclear Power Group. EXT shares rose 10pct yesterday before being halted, but fell 1.2pct to $8.75 today. Shares in Paladin fell 2.6pt to $1.665.

The financial sector firmed by 0.7pct with Macquarie Group (MQG) adding 2.7pct to $25.11.

Media stocks were strong performers. Shares in Fairfax (FXJ) rose 3.4pct to $0.925 while APN News and Media (APN) was up 4.1pct to $0.895.

Economic data released today showed business confidence improved in September. The NAB business confidence index improved from minus 8.7 to minus 1.5 in September in response to a weaker Aussie dollar. Business conditions improved from minus 2.9 to a reading of plus 2.0. The survey of 400 businesses took place from September 26-30.

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 0.7 cents per litre to a five-month high of 145.3 cents a litre in the week to October 9. Petrol is the single biggest weekly purchase for most families, influencing spending behaviour.

"The latest NAB business survey results don't stand in the way of a November rate cut," said CommSec Chief Economist Craig James of the data. "Inflationary pressures are well and truly contained and the lift in business confidence and conditions were in response to the now temporary fall in the Aussie dollar."

The Australian dollar briefly touched parity in New York trade overnight and at 4.30pm AEDT was worth US99.8c.

On the market overall, a total of 1.7 billion shares were traded, worth $4.8 billion. 670 were up, 339 were down and 341 were unchanged.

Ahead tonight, the US reporting season kicks off with third quarterly results due from Alcoa after the bell.

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