Australian Stock Market Report – Afternoon 10/12/2012

AFTERNOON REPORT
(5pm AEDT)

Local stocks managed a slight win today, with mining stocks leading the gains. The All Ordinaries Index (XAO) added 5pts or 0.1pct by close to 4510.1, to finish the trading week relatively flat (XAO closed at 4513 last week). However local stocks remain near 14 month highs.

A rise in commodity prices helped mining stocks. After being closed all of last week for Golden Week in China, iron ore has had an impressive rebound, finishing around US$116 a tonne. Shares in Rio Tinto (RIO) today rose 1.8pct to $56.40 while Fortescue Metals Group (FMG) continued its recovery from lows of $2.99 back in mid-September, finishing higher by 2.7pct to $3.85. Index leader BHP Billiton (BHP) added 0.9pct to $33.54.

Financial stocks were generally firmer, while the energy sector ended flat.

Shares in surf-wear retailer Billabong (BBG) plummeted by 17pct to $0.835 after private equity firm TPG withdrew its $694.5 million takeover offer. TPG made an unsuccessful $850 million bid for Billabong back in February and returned with its second, significantly lower, offer in July. Billabong has repeatedly stated that TPG´s latest offer undervalued the company. A second private equity firm, Bain Capital, made a matching takeover offer for Billabong in September, but it withdrew the bid only weeks later during the due diligence phase.

Economic data released today shows Australians are shunning credit cards. The average credit card balance fell by $35.90 (1.1 per cent) to $3,262.30 in August. It was the biggest fall in credit card debt for an August month on record in dollar terms and biggest percentage decline in 14 years. The number of credit card accounts rose by just 0.1 per cent in August with annual growth just 1.0 per cent - the slowest growth on record (18 years). In smoothed terms (12-month average) purchases made with credit cards were up 6.3 per cent on a year ago but purchases made with credit cards were up by 16.3 per cent on a year ago.

Meanwhile, the huge logistical challenge of delivering millions of new iPhone 5s all over the world has led to a spike in the cost of air freight. In the latest quarterly health check on the US economy, published yesterday, the Federal Reserve said: ´´Air cargo companies saw an increase in cargo volume tied to the launch of various smartphones and computer tablets, which favour shipment by air over other modalities.´´

Making news in Asia, Singapore´s economy shrank by 1.5 per cent in the third quarter but avoided a technical recession after growth in the previous three months was adjusted.

The Aussie dollar ended the day's trade at US102.77c, £0.6411 and €79.48c.

On the market overall, a total of 1.5 billion shares were traded, worth $3.9 billion. 512 were up, 397 were down and 359 were unchanged.

At 4.30pm AEDT on the SFE 200 Futures, the index was at 4488, up 12pts. The Dow Futures was at 13282, up 17pts.

Ahead tonight, producer prices and the University of Michigan confidence figures are released in the US.

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