Australian Stock Market Report – Afternoon 10/18/2012

AFTERNOON REPORT
(4.45pm AEDT)

Local stocks closed at their highest levels since July 2011 today, with investor sentiment boosted by the fact today's Chinese economic data contained no nasty surprises. The All Ordinaries Index (XAO) added 30pts by close or 0.7pct to 4580.9, after hitting an intra-day high of 4602.5.

The Chinese economy grew at a 7.4 per cent annual rate in the September quarter (consensus 7.4 per cent) down from 7.6 per cent in the previous quarter. It was the slowest annual growth rate in three years.

In the September quarter the economy grew by 2.2 per cent, above the consensus estimate of 1.8 per cent.

Retail sales in September were up 14.2 per cent on a year ago (consensus 13.2 per cent); industrial production was up 9.2 per cent (consensus 9.0 per cent); and fixed asset investment over the first nine months of 2012 was up by 20.5 per cent (consensus 20.2 per cent).

"The latest data is further confirmation that Chinese authorities have achieved the fabled 'soft landing' for the economy. Inflation is contained and activity is starting to lift again, rather than weaken," CommSec Chief Economist Craig James said of the data.

Mining stocks received the biggest boost, with shares in Rio Tinto (RIO) adding 4.8pct to $58.74. Fortescue Metals Group (FMG) shares added 2.7pct to $4.18 and BHP Billiton (BHP) was up 3.3pct to $34.56.

Financial stocks were generally firmer, although there was speculation the share price of the ANZ Bank (ANZ) was manipulated when the ASX opened today. ANZ shares closed down 0.04pct to $25.95 while the National Australia Bank (NAB) was the best out of the big four, firmer by 0.6pct to $26.95. The Bank of Queensland (BOQ) finished down 1.1pct to $7.27 after posting a $17.1 million full year loss. BOQ remains confident of a turnaround, with the loss the first by an Australian bank in 20 years.

Shares in the Ten Network (TEN) fell to new record lows, down 1.6pct to $0.305 after the company reported a $12.9 million annual net loss for the 12 months to August 31, 2012. The fiscal 2012 net loss was affected by $23.7 million in non-recurring costs, including redundancy costs, impairment charges on its outdoor advertising business and write-downs on its investment in OurDeal Pty Ltd. Revenue declined 13.7 per cent to $861.8 million. Ten says it will attempt to reduce costs through offering staff voluntary redundancies.

Airline stocks looked good, with Qantas (QAN) up 2pct to $1.355 while Virgin Australia (VAH) was firmer by 4.7pct to $0.445.

The Australian dollar received another boost from the rise in global equity markets and at 4.45pm AEDT was buying US103.84c. It was also worth €79.21c and £0.6436.

On the market overall, a total of 1.97 billion shares were traded, worth $5.1 billion. 575 shares were up, 408 were down and 332 were unchanged.

At 4.45pm AEDT the SGE 200 Futures was at 4549, up 14pts or 0.3pct.

Ahead tonight, weekly jobless claims figures, the leading index and the Philadelphia Fed survey are due for release in the US.

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