Australian Stock Market Report – Afternoon 10/17/2012

AFTERNOON REPORT
(5pm AEDT)

Local stocks rose to fresh 14 month highs today, supported by strong moves offshore, a pick-up in Chinese steel production and positive moves from major blue-chip stocks. US and European markets rallied overnight with US investors encouraged by strong earnings reports, while European investor sentiment was bolstered by speculation Spain could be close to asking for a sovereign bailout. The All Ordinaries Index (XAO) finished the day's trade up 37pts or 0.8pct to 4550.9, after hitting an intra-day high of 4558.7pts.

Index leader BHP Billiton (BHP) released its September production report today, with solid iron ore and coking coal output. However copper production missed expectations. CEO Marius Kloppers said today that he believes Chinese steel demand has peaked, and record commodity prices of the last decade won't return in the next ten years. BHP shares today added 1.2pct to $33.45 while Rio Tinto (RIO) were up 1.7pct to $56.05. Fortescue Metals Group (FMG) continued to add to yesterday's impressive gain, up a further 5.7pct to $4.07 on the back of its strong quarterly production report released yesterday.

Financial stocks looked good, with the exception of the Commonwealth Bank (CBA) which shed 0.2pct to $56.99. Shares in the ANZ (ANZ) rose 0.7pct to $25.96.

The Ten Network (TEN) continued to slump, reaching record lows of $0.31 after private equity firm Champ terminated the agreement to buy its outdoor advertising business EyeCorp for $145 million. Ten says it's talking to Champ about potentially amending the terms of the agreement in a bid to rescue the sale, the network had planned to use sale of Eye Corp to reduce its debt. TEN shares were down 7.5pct today.

Meanwhile, Nine Entertainment has avoided administration, with its lenders taking control of the company after reaching a deal over its $3.3 billion debt. Nine owed $2.3 billion to US hedge funds Apollo and Oaktree and a further $1 billion to investment bank Goldman Sachs. Each lender has taken a stake in the company in return for its debt, with the hedge funds taking the largest share.

Shares in property developer Stockland Group (SGP) slumped 3.7pct today to close at $3.42 after the company delivered a profit warning. The group has cited the worst housing market in 20 years for its expected slip in earnings.

Surf-wear retailer Billabong (BBG) fought back a little today, after a disastrous week in which its share price has plummeted more than 20pct. BBG shares today added 3.4pct to $0.77.

No local economic data was released today but the local currency received a boost on the back of the rise in equity markets. The Australian dollar rose to US103.12c, but fell against the Euro. At 5pm AEDT the Aussie was worth €78.79c and £0.6394.

On the market overall, a total of 1.92 billion shares were traded, worth $4.8 billion. 588 were up, 364 were down and 383 were unchanged.

At 5pm AEDT, the SFE 200 Futures was at 4535, up 43pts.

Ahead tonight, housing starts and building permits are due for release in the US.

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