Australian Stock Market Report – Afternoon 11/12/2012

AFTERNOON REPORT
(6pm AEDT)

One of the features of the last trading week was the weakness of the US market in the aftermath of the US Presidential election. The main thrust of the selloff was driven by the uncertainty created by the US fiscal position, a situation increasingly referred to as the US 'Fiscal Cliff'.This combination of expiring tax cuts and cuts to government spending will result in a fiscal contraction of around $600mln which could take up to 4% off US growth in 2013 if unresolved by year end.

As the new trading week got underway, The Fiscal Cliff continued to be the main theme driving investor caution throughout the region.

At the completion of trade on Monday, the S&P/ASX200 index had lost 14.0 points, or 0.31 per cent, ending at 4,448.0.
The broader measure of the market, The All Ordinaries index finished lower by 12.6 points, or 0.28 per cent, closing at 4,469.9.

Most sectors ended the day lower. The only 3 groups to finish in the black were Telecoms,Utilities and the Consumer Discretionary sector. Telstra (TLS) shares closed at $4.13 for a gain of 2 cents or 0.49%. AGL (AGK) last traded at $13.79, an improvement of 7 cents or 0.5% and JB Hifi (JBH) settled at $10.12 a gain of 1.2% or 12 cents.

The Energy, Industrial and Material Sectors were the biggest decliners. Santos (STO) finished the day at $11.02 after losing 25 cents or 2.2%, Brambles (BXB) eased by 2cents to $7.08 a loss of 0.28% and BHP Billiton(BHP)was down 16 cents to $34.30.

The Best performing stocks on the ASX50 today were Fortescue Metals Group(FMG)up 3.1%,Iluka Resources (ILU)up 1.8%,Suncorp Metway (SUN)up 1.4%, Alumina (AWC)up 1.2% and CBA (CBA) up 1%.

Some of the worst performers in the ASX50 today included insurer QBE which lost 8.3% after increasing its large loss provisions in North America following Hurricane Sandi.

Fertiliser maker Incitec Pivot (IPL) lost 5.2% after the group said the month long closure of its Mt Isa sulphuric acid plant could cost it $25 million.

Explosives maker Orica(ORI) lost 4% or 99 cents to $24.01 after it posted a fall in annual profit of 37 per cent.

Oil Search (OSH) ended down 3.4% on news of a 21 per cent or $US19 billion cost blowout in its Papua New Guinea liquefied natural gas project.

Investor focus now shifts to the European sphere for the beginning of the trading week. Today's main interest will be the Eurogroup meeting in Brussels. A decision on the Greek bailout tranche will not be made today. The Troika's final report has not yet been completed. But an interim report should be available. The markets could trade off any positive policy maker comment. The meeting starts at GMT 16.00.

There is plenty more news on the economy in the week ahead. In the Eurozone Q3 GDP numbers are centre stage. A modest contraction is expected, which if delivered, would confirm technical recession in Europe for the first time since the start of the crisis three years ago.

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