Australian Stock Market Report –Afternoon 10/17/2011

AFTERNOON REPORT (4.30pm AEDT)

The local share market has started the trading week on a strong note, with investor sentiment boosted by a raft of positive offshore news. Over the weekend, European leaders again pledged to take all necessary action to stave of the debt crisis, and work together ahead of the G20 summit in Cannes next month. Meanwhile US stocks posted their best weekly gains since March 2009 last week, boosted by strong retail sales and impressive earnings results from a number of companies, particularly Google. The All Ordinaries Index (XAO) today rose 68.9pts or 1.6pct to 4337.9 while the S&P/ASX 200 Index (XJO) firmed by 69.8pts or 1.7pct to 4275.4.

Every sector finished in the black, with miners posting the best gains. Index leader BHP Billiton (BHP) firmed by 2.1pct to $37.65 while Rio Tinto (RIO) added 2.4pct to $69.95. Base metals prices were mostly higher in London on Friday after Chinese economic data suggested inflation is moderating.

The financial sector gained 1.8pct with shares in Macquarie Group (MQG) up 2.6pct to $24.84.

Telstra (TLS) shares rose 1.3ct to $3.11 ahead of the company's Annual General Meeting tomorrow where investors will vote on whether the telco should join the National Broadband Network (NBN) in a deal worth $11 billion.

Shares in Super Retail Group (SUL) were placed in a halt after the company agreed to buy Rebel Sport from private equity firm Archer Capital for $610 million. Super Retail Group, the owner of Super Cheap Auto and Ray's Outdoors, will fund the purchase by selling $334 million worth of its shares in a nine for 19 pro rata entitlement. The new shares will be sold at $5.34 each, an 18pct discount to Super Retail´s last trading price of $6.50.

Economic data released today showed a rebound in lending, with total lending finance up 5.2pct in August following a 3.5pct gain in July. Most components recorded modest strength and total lending commitment now hold at a 23-month high.

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 0.5 cents per litre to a five-month high of 145.8 cents a litre in the week to October 16. Petrol is the single biggest weekly purchase for most families, influencing spending behaviour. The terminal gate (wholesale) petrol price today hit a three-year high of 139.3 cents a litre, up 1.1 cents on a week earlier.

New car sales fell by 1.5pct in seasonally adjusted terms in September, after rising by 3.4pct in August.

The Australian dollar rallied at the end of last week, and has risen almost 8c since falling below US95c on October 3rd. In the afternoon session, the Aussie was worth US103.16c, £0.6527 and €74.45c.

On the market overall, a total of 1.67 billion shares were traded, worth $3.4 billion. 683 were up, 312 were down and 346 were unchanged.

At 4.30pm AEDT on the ASX24, the futures contract was at 4280, up 60pts.

Ahead tonight, the October Empire Manufacturing Index is released. Industrial production and capacity utilisation numbers for September are also due. Wells Fargo and IBM release earnings.

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