Australian Stock Market Report – Afternoon 10/16/2012

AFTERNOON REPORT
(5pm AEDT)

Local stocks gained ground today, on the back of positive moves on Wall Street overnight and a strong production report from iron ore miner Fortescue Metals Group (FMG). After hitting an intra-day high of 4537.9pts, the All Ordinaries Index (XAO) finished the day's session up 8.4pts or 0.2pct to 4513.9.

Fortescue Metals Group, the world's fourth largest iron ore producer, today reported a 26pct rise in iron ore shipments for the September quarter. FMG received an average price, including cost and freight, of about US$98 a dry metric ton, compared with an average 62pct Fe grade benchmark price of US$113 a ton during the quarter. CEO Nev Power also indicated today that work is set to resume on several halted projects if iron ore heads back to US$120 a tonne. FMG shares today added 3.5pct to $3.85. Rio Tinto (RIO) meanwhile posted record iron ore numbers, although its copper production was a little weaker than expected. Rio also downgraded its diamond production guidance to 12.6 million carats. Rio shares today fell 1.3pct to $55.12.

Elsewhere financial stocks once again looked strong, with shares in the National Australia Bank (NAB) up 1.1pct to $26.62.

Telstra (TLS) today held its Annual General Meeting, reassuring investors its current dividend policy would remain. Telstra will pay a fully-franked dividend of 28 cents per share in 2012/13 and in fiscal 2014 Telstra would also return to its usual practice of considering dividends on a six month basis. The AGM report also suggested Telstra expects free cashflow for the coming year to be between $4.75 billion and $5.25 billion. TLS today closed steady at $3.94.

Shares in troubled surf-wear retailer Billabong (BBG) fell 4.5pct today to close at $0.745, a new record low. BBG shares have been in free-fall since Friday when private equity firm TPG walked away from its revised $695 million takeover offer for the company.

Minutes from the RBA's October board meeting were released today, suggesting the decision to cut interest rates in October was more to boost confidence rather than to address any significant structural downturn.

Elsewhere, total lending finance fell by 3.2 per cent in August to $49.3 billion - just off two year lows. Total lending commitments are down 14.8 per cent on a year ago. However loans to buy new cars were up 32.5 per cent on a year ago.

The Australian dollar ended the day's trade at US102.72c, €79.12c and £0.6386.

On the market overall, a total of 1.72 billion shares were traded, worth $3.6 billion. 498 were up, 470 were down and 343 were unchanged.

At 4.30pm AEDT the SFE 200 Futures was at 4492, up 11pts or 0.3pct.

The Dow Futures market was suggesting a gain of 11pts or 0.1pct on open.

Ahead tonight, the consumer price index, capital flows data and industrial production figures are due for release in the US.

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