Australian Stock Market Report – Afternoon 10/22/2012

AFTERNOON REPORT
(5pm AEDT)

The Australian share market eased from 14 month highs today, following a weak lead from offshore markets and lower commodity prices. US stocks fell on Friday night on disappointing earnings results and with investors spooked on the 25th anniversary of the 1987 stock market crash. The All Ordinaries Index (XAO) closed down 28.9pts or 0.6pct to 4565.6pts.

Rio Tinto (RIO) shares were lower by 2.4pct, closing at $57.75, with the mining sector as a whole underperforming. Shares in BHP Billiton (BHP) finished down 0.9pct to $34.70 while Fortescue Metals Group (FMG) was weaker by 2.1pct to $4.14.

Banking stocks also had a bad day, with Westpac (WBC) and the National Australia Bank (NAB) receiving broker downgrades. Shares in WBC lost 0.7pct to $25.38 while NAB was lower by 0.8pct to $26.02.

Australian grain producer GrainCorp(GNC) soared almost 40pct to $12.30 after US agribusiness Archer Daniels Midland confirmed it was making a play for GNC following a 10pct raid on the stock last week. ADM will offer a cash bid of $2.7 billion, or $11.75 for GNC; an offer which has been labelled too low by some analysts.

Elsewhere, China's Halong Mining has its finances in order for its $1.37 billion offer for iron ore miner Sundance Resources (SDL). SDL says its board is satisfied with the offer, with Hanlong expected to lodge more information with the watchdog ASIC in coming days. Hanlong lowered its offer for SDL back in August by one fifth following falls in iron ore prices. SDL shares added 3pct to $0.35.

The CommSec quarterly State of the State report was released today and shows Western Australia remains Australia's best performing economy. But Northern Territory is coming up fast; with the Inpex natural gas project providing strong momentum to the 'top end' economy. The ACT economy is little changed from three months ago, supported by solid dwelling starts and above-average population growth. But simply the Northern Territory has more momentum at present. Tasmania is lagging all other economies on five of the eight indicators. Weak population growth and rising unemployment continue to restrain retail spending and overall economic growth.

A video of CommSec Economist Craig James discussing key aspects of the State of the States report is on our YouTube site: www.youtube.com/CommSecTV.

In other economic news, the national average retail petrol price rose by 2.9 cents to 149.4 cents a litre in the past week. However prices are set to ease. Over the past week the Singapore gasoline price has fallen by over $6 a barrel in Aussie dollar terms and is holding at the weakest levels in nearly three months. CommSec expects the national average retail petrol price (pump price) to ease by around two cents a litre over the next fortnight.

The Australian dollar ended today's trade largely unchanged; and at 5pm AEDT was worth US103.28c, €79.11c and £0.6441.

On the market overall, a total of 1.78 billion shares were traded, worth $4.14 billion. 391 were up, 602 were down and 322 were unchanged.

At 5pm AEDT, the SFE 200 Futures was at 4536, up 3pts.

No major economic data is released in the US tonight.

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