Australian Stock Market Report – Afternoon 10/8/13

EVENING REPORT
(5pm AEDT)

The Australian sharemarket finished lower for the third consecutive session, with the All Ordinaries Index (XAO) falling by approximately 0.2 per cent.

Both sides of politics in the US are still finding it hard to agree on a 2014 budget. The longer the shutdown continues (day 7), the worse it will be for general confidence and the greater the level of concern relating to the US economy. North America is also just 10 days away from needing to raise the nation's debt limit. The S&P500 Index sank to a four-week low overnight, with the DOW also closing below 15,000pts.

Commodity prices were mixed overnight, with gold lifting by 1.2 per cent to US$1325 an ounce. The US government shutdown has reduced the chances of a Federal Reserve taper in the near term, which has recently been pushing the value of the precious metal lower. Gold producer Newcrest Mining (NCM) tumbled by 2.3 per cent and is adding to last month's 7.5 per cent slump.

Oil prices remain well supported at US$103 a barrel. Oil and gas rigs in the Gulf of Mexico have been shut in recent days as a precautionary measure for Hurricanes. Oil and gas producer, Woodside Petroleum (WPL) eased by 0.75 per cent while Santos (STO) dropped by 0.5 per cent.

Plenty of economic news today; with most readings quite positive. The NAB monthly business survey was issued early in the session and showed that business confidence is at its best level in 3.5 years. The reading rose from +4 in August to +12 in September. This is based on a survey of around 350 Australian businesses; a reading above 0.0 indicates optimism. Greater political certainty (federal election out of the way) is considered to be the main driver. The more confident businesses are, the higher the chances of a spike in hiring and investment.

The latest tourist arrivals report was also issued today, with the number of visitors rising by 2.3 per cent in August. 712,000 tourists came to Australia from China in the past year; a great result for the tourism sector.

According to a weekly report on petrol, petrol prices slipped by 1.2c/l to 150.7c/l across the country. The average price of petrol is likely to fall by as much as 5c/l in the next 2-3 weeks.

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